Last night at 10:00, residents and visitors here in Salem were treated to the annual Halloween fireworks, marking the official end of fun and celebrations that start in mid-September and pick up full steam in October. The final count hasn’t been announced but officials expect we will have seen 1.25 million visitors in the month of October alone.
Not all locals feel as warm about Halloween season here, but we’re big fans and try to enjoy all of it. I have a couple of go-to costumes I use throughout the month. The one I wear most is Indiana Jones, and I don’t want to brag or anything, but I’ve had more than a few people ask if they can get a selfie with me in that costume.
As we flip the page on Halloween we start to move into the holiday season. First up for most of us is Thanksgiving, and if you’re like me, this is a good time to reflect on all we have to be thankful for this year.
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First and foremost, I am thankful for my family, friends, and colleagues who know and love me and provide me with the support to successfully navigate life.
I am also grateful to live with food and housing security as well as a high degree of security for my life and property. Crime rates for almost all categories of property crime, as well as for violent crime, continue to fall in this country, despite the impression that disproportionate coverage by our for-profit media businesses give to crime. We really are safer than we have been, even if it doesn’t always feel that way.
These are not things I take for granted, and I am aware that people in Ukraine, Gaza, Israel, Haiti, Venezuela, and many other parts of the world are not so fortunate. And I am aware that my blessings are not shared by all in our own country.
Soft Landing – Check!
Much of what I have to be thankful for is built on the fact that the United States is a strong, stable, and vibrant country with an economy to match. In spite of the challenges and some stumbles, particularly since the outbreak of the Covid pandemic, our economy is literally the envy of the world.
We have recovered better and faster than any major economy, generating record corporate profits and jobs, wage increases and new business startups while at the same time bringing inflation back under control. Many very smart people thought it wouldn’t be possible to bring inflation back to earth after such a massive infusion of money without enduring a recession, but that is exactly what has happened. I’m not mocking anyone. The odds of a successful soft landing were not great, but that is exactly what we got.
As an investor, I am thankful for all of these conditions that have created a very robust stock market that continues to rise and set new records (investors are already looking ahead and wondering how soon the Dow could hit 50,000).
A Soft Landing Is Great, but So What?
A soft landing is certainly a wonderful development, but what does it mean to you as an individual investor? There are two overarching trends that have me bullish.
The first is the enormous sum of money still on the sidelines in money-market funds. I wrote about this in August (The Stock Market Isn’t Overvalued: Here’s Why). As interest rates fall (and continued cuts by the Fed seem likely), those funds will get less attractive and much of that money will find its way to the strong stock market, raising demand and pushing up prices. That won’t happen suddenly, but I estimate close to $3 trillion dollars will come back into stocks over time, and that will move the needle.
The second reason to be bullish continues to be AI and other economic innovations that will drive greater productivity (think: profits). I’ve written about productivity before and how AI will drive further gains (Productivity Drives Stock Market Growth) so I won’t repeat that all here.
One somewhat newer development worth noting is that the pendulum is swinging back on the Department of Justice’s enforcement of antitrust laws. This is a controversial area.
Overly aggressive enforcement of antitrust laws can kill incentives for innovation. Too-lax enforcement permits monopolies to arise that tend to stifle innovation and hold back productivity gains. The government is taking action against Amazon and Google right now. Others may follow.
Again, antitrust enforcement is a pendulum. It’s at its best when it is in the middle. Collectively, we gave a wide berth to the big tech companies when they were growing startups, but it is time to acknowledge that their phenomenal success has a downside that needs to be dealt with.
The bottom line? The opportunity to make money in the stock market remains strong (and is getting better), and for most people, it’s the best place to have most of their assets while managing their risk.
And What About the Election?
Of course, the election is this coming Tuesday. Two important things to note about the election:
1) Whatever happens, and regardless of your politics, Americans have much more in common than not. With the “winner take all” approach of most states, it’s easy to see the country in terms of blue and red, but, in fact, most of the country is purple. Don’t let politicians or pundits or your crazy uncle tell you otherwise. We all used to know that, and after an election we’d refocus on our common interests and goals and move forward.
2) Whoever wins, the stock market will continue to provide profit opportunities. The overall market may perform better or worse (although history says there’s not a big difference in stock market performance under Democratic or Republican administrations) but there are ALWAYS opportunities to make money with stocks and options.
That’s all I’m going to say about the election. I am tired of this election and happy to get past a process that has at times been somewhat less pleasant than being thrown into a box of snakes.
As my Halloween alter ego says, “Snakes, why’d it have to be snakes?!”
For your investing success,
Ed Coburn
President, Cabot Wealth Network
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