Jonathan M Satovsky discusses how media headlines can perpetuate a self-fulfilling prophecy and how this has increased recent investor anxiety. He also offers guidance to help investors lean into a long-term investor mindset.
Good afternoon. This is Jonathan Satovsky of Satovsky Asset Management. October 2nd 2019 with a quick video blog update.
And as the October seasoned and the fourth quarter begins, we get a quick 800 point decline in the financial markets.
And the paper’s day-to-day, week-to-week, quarter-to-quarter over the last 12 months have accelerated commentary about recession being imminent as a byproduct of the clock of 10 years of a bull market in the United States of America.
Well, 50% plus of our economy is predicated on the conspicuous consumption of the consumer.
So I just want to attack that head-on.
Yes, as some people can parallel some government policies similar to the late 1930’s and point to all sorts of parallels to historical patterns and all of this nonsense.
But let’s just talk about the core reality.
If the vast majority of our economy is predicated based on conspicuous consumption or consumer consumption and every day people read about recession and 67% of CEOs all around the world are afraid of the future expecting an imminent downturn and people start to spend less or people look for signs to revalidate.
Houses are selling a little slower, prices have declined, stock market has declined ups.
So, if the outcome leads people because they read the commentary and they read the headlines that a recession is imminent, they should stop spending.
If it leads to people stop spending, then it’s a self-fulfilling prophecy.
People can create the future that they want.
Of course, if people see that wait a second, I still have a pay check that comes in.
I still see that people are waking up and going to work.
I still see economic activity.
I still see people hustling.
I still see people going to sporting events and buying clothes and traveling and airplanes are full.
So, consumption continues. And if consumption continues it seems to me rather difficult to envision a material recession or decline.
Yes, you could have slowing conditions and lower consumer demand but it depends on the loop to which we want to live in to.
And today, fear gage passed 20. Generally, when it passes 20 to 30, it’s a sign that people have a lot of anxiety about the future.
A lot of worry about long term investing as I’ve often routinely commented about.
Investing patterns have not been patient, have not been static.
People have not been thinking long term.
Most investors still have short-term thinking and have reduced and reduced their holding periods.
So people are living, maybe half of the population is living pay-check to pay-check.
It is living week-to-week. It is just trying to get through the week.
And if they’re getting through the week and they got paid, they’re gonna consume.
So I look forward to the day that basically we get past this daily short-term rhetoric and we can get an ecosystem built toward a good keen balance on consumption and saving with a little bit of delayed gratification and patience for future.
Today abundance and a future for tomorrow’s abundance.
With that, have a great October.