The Death of “Slow”

It appears Armageddon did not arrive with August as so many had predicted.

Even the tail-end of the Q2 earnings season has turned out to be better than expected. 

But if you really need something to be concerned about just stand pat for about 45 days and the next earnings season will be upon us.

Surely that will be “worse than anything thing we have ever seen before.”

Or maybe not.

When you stand on the beach and watch the tide rise - it slowly reaches its peak over a 6-hour cycle and then recedes for the next 6 hours. 

This process repeats itself 24-hours-a-day. 

The tide of technology drivers headed our way is similar, but with one main difference; it’s just going to keep rising for the next 30 years or so.

What is "Old" will not survive this tide. 

Old processes, old layers, old trendlines, old perspectives, old "ways of doing things," old meeting agendas, old corporate structures, old paradigms.

None of it.

As 2020 dawns, everything will become new, slowly but surely. 

Generation Y will wash over the landscape like a tide rising at the beach. And it won't stop for decades. 

In fact, the pace of change is only set to accelerate. Business models and adaptations will only move more quickly.

Slow will perish and forward thinking will come at a premium.

So, we have to learn to look beyond the obvious and think in terms of: "Yes, but what's next?"

And we have to understand that every single company will become a tech company.

These changes will bring vastly better times.

We’ve only scratched the surface.

As the summer comes to a close, I’m reminded of the lyrics from an old Don Henley Song:

"Nobody on the road. Nobody on the beach. I feel it in the air. The summer's out of reach. Empty lake, empty streets. The sun goes down alone..."

The news is great. The crowd hates stocks again. The angst of summer, the incessant drumbeat of the "Trade War" and the poisonous political headlines have created a false negative horizon. 

Long-term investors will benefit greatly as the last of the weak hands come back from a summer break and sell.

The data is clear about this. Sentiment stinks (except for consumers), and the equity markets are on sale.

Check out the BAML Fear Indicator:

And here’s the latest CNN Fear and Greed Index too.

Same signal. Same indication:

The lengthy trade range has done exactly what long-term investors want:

• They make the equity market much less crowded.
• They make prices cheaper at times if you can stand the boredom.
• They reset "risk expectations" so they can be beaten again going forward.
• They always define "volatility" incorrectly as something you should be afraid of.
• They make the future "cloudy" again - which almost always shuffles out the weak hands.
• They push the masses back into the fear-zone - set only then to coax them back in over the years ahead as prices rise.

Trade war fear mongering by the media has delivered massive benefits to consumers.

And that’s fantastic news.

Realise that the consumer is doing just fine, unless you allow yourself to be talked into a recession:

And they love what fear has done to interest rates.

Companies and consumers alike will save untold billions in interest costs over the next three decades in the current refi boom.

The markets have been gyrating all month on a Tweet, news flash or scary headline. 

It's all fake, folks. 

Here’s that trade range for you:

In other words - the "damage" was done in the first 4 trading sessions of August.

The rest of the month was moving the crowd from one side of the bathtub to the other. making Wall Street a nice bit of change for a dead month.

The investors who will win in the future unfolding ahead will be those who focus on the long game, with patience and discipline.

They will accept that setbacks, bear markets and recessions are a part of the trip up the mountain, and that trying to get around those events is the surest way to underperform over the long haul.