(Warning: today’s commentary will not appeal to investment “cowboys”, speculators, yahoos, or those otherwise predisposed to unrealistic capital gains expectations)
Embrace the lag
The nature of change, positive or
negative, is that it evolves over time, sometimes hidden in plain sight, or
more so at the impulse of vast emotional, fiscal, or social stimuli. We know what the issues are today: hunger,
poverty, security, and sustainability.
The question is whether we as a society have the resources and willpower
to do something to solve them. As
investors, the lynchpin is always how much time and patience are we willing
to offer before a financial reward is contemplated.
Therein lies the essence of the
problem for Wall Street and for Main Street.
More frequently than I have seen in the past, the financial community
has become fixated by and dependent upon the big score, the immediate
payoff. And why not? Public companies are obligated to their
stakeholders to deliver a profit.
Clients are unwilling to wait for professionals to customize portfolios
and risk assessments, preferring the internet for direct access to ideas and
rumors. But obstacles to social progress
emerge when those short term expectations supplant the urgency to get things
done that cannot be solved in 3 minutes, 3 weeks, 3 months.
Consider your own matriculation
through life. Did you…could you…master
geometry on the first day of class?
Could you complete a marketing assignment on your first day of a new
job? Can you “learn” to play golf in one
day? Fly a plane? Repair a car?
These things take time. And
unless you expect to be incompetent at everything you undertake, you know going
in that anything worth doing requires a commitment and an effort.
Thus, an investor must also have the
willingness to stick it out, to bide one’s time, and to manifest the guile to differentiate
the bright spots of a larger purpose of problem-solving that only a real
investor, not a gambler, can embody.
During periods of social evolution it
is necessary to align with transition and adaptation to any new normal. In so many ways, the recent Covid pandemic
wreaked havoc upon our social and professional lives. Kudos to us all for the effort it required to
come out on the other side. But now we are faced with questions about our
humanity and our connections with one another.
No one is asking you to sit back with a wait and see approach, but we also
cannot avoid the matters of rebuilding daily structure and its impact upon our
communities for the future.
Solving these misfortunes is a
journey over time. We must think about a
new energy economy, innovative agribusiness, advanced pharmaceuticals, and
rebuilding crumbling infrastructure.
There will be setbacks and punctuation marks…it’s all part of the cycle
of life.
Amid ongoing global uncertainty the
grip of negativity is certain. Are we in a recession? Is inflation permanent? Consider that the world’s economy was dormant
for nearly two years; that the pent-up petition for all things necessary and
discretionary became so great as to put a chokehold on global supply lines;
that the “price” of things had been stunted during an economic hiatus then
unleashed as demand outpaced supply.
Yet, still, we are emerging from the crisis in robust fashion absent a well-defined
political agenda…it is survival time.
After two very challenging years we
should be under no allusion that the answers are immediate. However, we should not misrepresent the challenge
by waving our arms, abandoning the processes of success and tolerance, or
failing to recognize the enormous investment potential that any downcycle
always offers on the reverse-side. Against the backdrop of last week’s news
about inflation and GDP, we feel quite euphoric about extending our investment
horizon towards thematic, sustainable, and socially responsible alternatives.
