Do you remember the scene from the movie "Patch Adams" in the mental hospital when the grouchy businessman neighbor teaches Robin Williams to hold up four fingers, but to look past them to see the true solution, therefore blurring them to eight? He urged Patch to look beyond problems to see the true issue. As we build and protect our special organizations in this new year, we must see past the noise and understand the greater trends.
As a young financial advisor, and with the help of many people much smarter than myself, I was able to see that technology would then enable a new business model creating boutique wealth management companies. These boutiques could provide the same level of expertise and access for investors through advanced automation and partnerships with Wall Street, while providing the small company personal service and attention which had nearly become extinct in the the large firms. In a rare moment of clarity, I got off the train carrying everyone else, and with a little bit of luck and a lot of hard work, was able to build this model to serve clients in 42 states and 5 countries.
Our busy task list, the trillion emails in our inbox, and the sensationalized media divert our daily attention from the big picture. In business and the economy, we focus on the noise of here and now while Adam Smith's "invisible hand" is actually creating the broader result, or negatively, bringing us the next Black Swan to destroy our best-laid plans. This year let's promise to take a breath, raise our head out of the trenches, and see through the fog and friction of warfare [and I promise to stop mixing so many metaphors!]. Let's look at a few bigger trends:
1. Bet on America! I love the following synopsis from the Wall Street journal last year. "The lesson here is that, as Warren Buffet likes to say, don't bet against the United States to succeed. America makes mistakes, voters sometimes hand power to misguided politicians, and the public sometimes succumbs to financial manias that turn into panics and crashes. But left to work, trade and invest without too much political interference, Americans unleash their energies in productive fashion. Stocks fluctuate, but over time they go up - often in years you least expect it." Amazing. We must look past stumbles and short-term failures, and put our chips on winners, not just America but also those quality companies and quality people you should never bet against. I have a short list of people I would never bet against.
2. There's a ton of oil, the U.S. is a net-exporter, and it plays a smaller and smaller role every year. So, there will be short-term spikes and crashes in prices and production in which fortunes can be made and lost, but long-term it will not be the controlling variable it used to be. We will have plenty of it, thanks to fracking and other technologies, until the world's smart people figure out how to make nuclear and sustainable energies, and the batteries, economically-self-sustaining without tax dollars.
President Trump alluded to the same last week when he basically said, "Why am I messing around in the Middle East? I don't need their oil anymore." Around 21% of global crude and petroleum products flow through the Straight of Hormuz, and oil prices barely budged last week with the threat of war. Richard Soultanian, co-president of energy consulting firm NUS Consulting Group, said despite the geopolitical risks, the market is still oversupplied, and he points to record supply from the U.S. and OPEC's resistance to meaningfully reduce global output. Move onto water. Water is the next oil, and it will even be congruent with your save-the-planet mission.
3. We have already won the trade war with China, but they haven't told you yet. The daily tweets and media stories declaring trade Armageddon, when impeachment hearings or other scandals have a light news day, are just noise distracting you from the Invisible Hand. In his Political Economics column, Joseph Sternberg recently provided a clear synopsis. "China's current-account-surplus - the amount by which its exports of goods and services and income from overseas investments - has shrunk for years. It's likely to tip into a deficit early this decade, meaning China will import more goods and services (and receive less profit from overseas) than its exports." That might be startling to you. Let's repeat, soon China will be importing more than it exports.
To accommodate this radical global economic shift, China will have to entice more foreign investment into its domestic economy - factories and service companies. This will demand that China implements better rule-of-law protections for foreigners and intellectual property, even human rights. In other words, everything we have been arguing about will come about simply because of the demands of demographics and silent rules of free markets. Don't we keep saying in JAM VIEWS that money rules all? Markets always override government interventions. See past the 8 fingers.
Shut out the noise and think through the larger trends in your business, charity or world mission. On Oct. 21, 2016, Politico wrote, "Wall Street is set up for a major crash if Donald Trump shocks the world on Election Day and wins the White House." The S&P 500 has risen approximately 46% since then. The Bureau of Land Management released its plan to be green and install a 7,100-acre solar farm in the desert outside Las Vegas, but it's now being opposed by the Greens because the arrays will disturb the desert tortoise, the Kit Fox and the Threecorner Milkvetch plant. Keep chanting to yourself, "It's all nonsense!"
Finally, a thought to help us foresee the bigger picture, hang a frame in your home office of Dorothy Lange's 1936 iconic image, "Migrant Mother." I know I am planning to.
"Haste ye. Walk while you have the light, lest darkness come upon you, for he that walketh in darkness knoweth not whither he goeth." John 12:35
** Many thanks to the WSJ, Forbes and Fortune for the above quotes and statistics.
** Photo credit goes to www.iucnredlist.org
** For more information on Jeff's Books, Blog, and Legal Challenge, please visit www.jeffmartinovich.com.
** To access JAM Views directly please visit jeffreyamartinovich.blogspot.com
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