I received this email from an anonymous reader.
“You are missing the elephant in the living room. The Wall Street and markets you knew are gone. The Federal government has taken over and it will never be the same. Following the past approaches will eventually lose your following.”
Well, it’s true that Washington has more influence than it used to, and I’m not a fan of the trend. But I remain fully confident that markets will continue to function, that creative forces are alive and well in both the U.S. and around the world, and that companies both large and small are changing the world for the better and will continue to provide profitable investments for us in the months and years to come.
I have no doubt that every century of recorded history has brought out doom-and-gloomers who’ve proclaimed, “This trouble that we have made (or that our enemies have made) will be the end of civilization as we know it.” Many of them, I have no doubt, have been quite rational beings, well-educated and sober. But so far they’ve been wrong, and I’m betting that my correspondent above is wrong, too.
The reason is that man adapts! And I have history to back me up.
As I write, I’m looking at a century-long chart of the stock market (Dow Industrials, Nasdaq Composite and S&P). Overlaid on the chart are a variety of economic data, including discount rate, T-Bill rates, income tax rate, minimum wage, recessions, CPI and more. But of greater interest are the events, including the San Francisco earthquake of 1906, Halley’s Comet in 1910, the market closure (July 31 to mid-December, 1914) caused by the start of World War I, the Arab oil embargo of 1972 and more.
After every major disruption, man adapted and the economy recovered. Even better, the chart shows that the best times to invest are exactly when people like my anonymous correspondent fear that we may never be able to invest profitably again. Knowing that, I welcome his brief email.