Chairman’s Letter Q3 2024: The life of a Thanksgiving Turkey
I have made fun of bearish investors; I have taunted strategists who try to predict the level of stock markets and comment on every economic or corporate data point as proof of their thesis being correct. Given the massive reach of the letters I pen, and the controversy that I have subsequently spawned, I have had to hire private security. It truly is a sad situation when even a schmuck like me needs protection. I get that Mark Zukerberg needs $25 million to stay safe, but me? Nonetheless, I must carry on…
The world continues to spin upon its axis smoothly, gliding through space peacefully when observed from afar, yet so much sadness besets the inhabitants of this globe. There seems to be little limit to the lengths some go to harm others, nor are the aftershocks of the footprints we have left upon this Earth lessening in their intensity of devastation. There is much to mourn.
Thankfully, the costs of all this harm and sorrow have yet to affect the general level of economic activity. Money does not rest idle for long, and its velocity of movement continues to support spending. A healthy chunk of that money is spent consuming the products and services that are fueling the profits of the businesses you own. But will this continue? When will these crazy bullish investors wake up to the fact that things could get bad??
Well look, it’s true, things could get bad.
Consider the life of a turkey. It is fed every day. Because of this, the turkey’s belief is reinforced daily that it is a general rule of life that this ‘farmer’, is looking out for its best interests.
Life is good until the Wednesday before Thanksgiving when something unexpected happens. The turkey will incur a revision of belief.
Sad!
Now, look, I’ve been called a turkey before, and I fully understand my mortality, but this is not the way to think about investing. Surprises happen all the time, but the Bogeywoman of investing folklore about September and October usually gives way to the march of time. New turkeys are born, and the cycle of life begins once again. In fact, October is best known as the bear market killer.
Even after 2 years of good returns could it get even better? Could things actually keep going right? Could the turkey endure? Will there be turkey for Christmas? Will we all get treats in our stockings?
Just like all turkeys don’t get eaten every Thanksgiving, so too it is also true that the general direction of the economy over time is UP! While the number of people without work has grown to 4.2% of those who want to work, 95.8% are working! What’s more, those working are seeing their incomes rise at a rate GREATER than their cost of living. Those retired or who have savings invested have seen their wealth rise. Personal spending is at record highs. Little wonder that corporate profits and margins are at record highs. Farmer ‘Fed’ is providing food to a growing economy by lowering interest rates. It’s just too good out there! Someone get me a sedative, I’m too fired up!
By the time you receive your next report in January, the Middle East and Eastern Europe will still be tragic places, a new President in the U.S. will be sleeping in his or her new bed, new worries will have been debated relentlessly and new concerns spawned. What won’t change is the fact that governments will continue to spend like mad, consumers will continue to spend like mad, good businesses will continue to make money like mad and investors will be rewarded for thinking like owners.
Happy Thanksgiving and enjoy the turkey.
