Wall Street. Main Street.
The economy of the future. The economy of the present.
Can you tell the difference?
Well, there’s a clear separation between the two — but most of us don’t realise how profound that separation actually is.
For example, let’s look at what happened during World War II. It’s the most devastating, most traumatic conflict of all time. Up to 80 million people perished. Entire swathes of the planet were reduced to rubble.
And yet…here’s how Fortune magazine describes Wall Street’s performance during that time:
The Dow increased 10% on the first day of trading after Hitler invaded Poland in 1939. When the attack on Pearl Harbor occurred, stocks fell 2.9% but regained those losses in one month. From 1939 until the end of the war in late 1945, the Dow saw increases of 50%, more than 7% per year.
December 7, 1941. A day of infamy at Pearl Harbor. But stocks shrugged it off and marched on with courage. Source: Britannica
Extraordinary, isn’t it?
What most people miss is that Wall Street is not connected in real time to Main Street.
The truth is that the stock market is forward-looking. It’s actually pricing in all available data about the next 12 to 18 months — sometimes more — and it’s reflecting them accordingly.
This is why, throughout 2022, we saw a drawdown of stock values on Wall Street — even though the employment data on Main Street remained strong and there was no recession.
It’s actually the future fear that stocks are reacting to. Future fear of inflationary pressure. Future fear of rising interest rates.
So…think about all the bad news that you’ve heard.
Think about all the emotional wrangling that’s happened.
Has it already been priced in?
Is his bark worse than his bite? Due to falling ratings, ‘Putin: The Musical’ may struggle to get renewed for another season. Source: CNN
Interestingly, often enough, you’ll find that the fear is overdone. Amplified. Exaggerated.
For example, my colleague Simon Angelo has been watching a fascinating development. Despite all the disruption of the past year, Germany’s economy is already back to pre-pandemic levels. It is resuming growth.
Certainly, someone like Vladimir Putin is very noisy. He gets all the media attention.
But it’s actually the quiet professionals — the quiet achievers — who really matter in the grand scheme of things.
As a wise long-term investor, this is what you have to pay attention to. Because this is where the smart money will flow.
Source: MarketWatch
If that’s not convincing enough for you, well, consider this:
- According to Yale University’s Robert Shiller, the odds of the market rising in the future are actually pretty good.
- On average, when you study all 12-month periods over the last 150 years, here’s what you will find: the market tends to rise 69.2% of the time.
- The odds are two out of three.
Our opportunity for you
Forget fear. Ultimately, it’s about courage.
Here at Vistafolio, we are helping our Eligible and Wholesale Clients regain control of their destiny by building a roadmap to financial freedom.
Here’s how we’ve done this year:
| Vistafolio year-to-date return (as at 1 December, 2022) | –0.28% |
| MSCI EAFE Index [Benchmark] (as at 29 November, 2022) | –14.48% |
| NZ urban property markets (to 30 November, 2022) | –5.10% |
| Top KiwiSaver growth fund (as at 31 October, 2022) | –12.35% |
| Global equity fund (as at 31 October, 2022) | –14.73% |
| Australasian growth fund (as at 31 October, 2022) | –31.43% |
(Past performance is not an indicator of the future.)
While others have faltered, we are powering ahead. Across October and November, our Vistafolio composite portfolio grew over 9.5%. We believe that we are on track to go green and get positive results by the end of this year.
At the moment, we have our eye on investment targets in Australasia, Europe, and North America. We are especially keen on resilient sectors like infrastructure, energy, and commodities.
It’s about protecting your wealth. Growing your wealth. Gaining passive income.
So, are you looking for guidance? For direction?
Come talk to us. We’re now offering an initial free consult for Eligible and Wholesale Clients. We’d love to hear more about your financial goals and dreams.
Regards,
John Ling
Analyst, Wealth Morning
(This article is commentary and the author’s personal opinion only. It is general in nature and should not be construed as any financial or investment advice. To obtain guidance for your specific situation, please consult a licensed Financial Advice Provider.)