It wasn’t so much valuations that concerned us; but, rather, the incredible amount of debt finding its way on company balance sheets, not to mention the federal government. Combined with rampant speculation, the pending decline was a forgone conclusion and, of course, looked so very clear in the rear-view mirror. “Find a new profession son, this business is toast, and I’d be surprised if there’s even a stock market in a year or two.” This was the advice given to me by an economist and investment professional who had just notched his 40th year in business. The year was 2001; the Dow was at 10,000. I’m so glad I didn’t listen to that advice.
“Will they really close the market?” I asked my father, as I idled in a line of cars 30 deep waiting to fill my gas tank. “Probably, they did after the war started, but the question isn’t whether the market closes, it’s whether or not it reopens.” I was scared, because I had been pouring every ounce of energy and precious dollars to start my investment firm, while moonlighting as a sales rep for a tech company to add extra cash. Like many, I remember exactly where I was when plane 1 hit, and precisely the room to which I moved to watch the 9/11 reporting, as plane 2 hit. I was told that the business I started was over, as the stock market would never recover from this. We were going to war, and I should be prepared to defend myself rather than research stocks. Clients were scared; I was scared. I didn’t sleep for days as I watched 24 hour news and called friends living in, or close, to the city to make sure they were OK. The markets closed for 5 days; the Dow was around 8,000.
After navigating the previous two scenarios, I felt as if I had seen everything. It wasn’t until 2008 that I realized just how wrong I was. Fortunately, this time, I had experience on my side and unwavering confidence, combined with agnostic market views. I remember chatting with one of my best friends who was working in corporate finance at Bank of America. “It’s over man, completely done. Global financial meltdown is upon us.” It was hard to disagree. I was so concerned over liquidity that I remember calling Schwab to manually move our, already cash heavy, clients out of a money market fund into another that held only treasuries. The trader on the line thought we were being extreme. Later that year, the money market fund we exited faced liquidity problems. The national mood was anger, frustration and fear. I remember hearing of a trader acquaintance who left work and stepped in front of a subway train. He apparently left a wife and two young girls. I was told by many to seek another profession. The financial business, as we knew it, was over. This time, I knew better. I put my head down, worked my butt off and successfully navigated one of the hardest markets since the great depression. I just looked back at our financial records. In 2009 we grew our business 48%.
I realize where you believe I am going with this. Ironically, no I’m not here to assure you that all will be right with the world soon and that we’re all just overreacting. That couldn’t be farther from the truth. My wife recently had to question me for watching too much raw footage from riots and protests that turned ugly. I watched a thirty-something-year-old female beaten, while she attempted to protect her clothing boutique. I’ve seen a police officer shot and killed on camera. I watched a man, near my hometown in New York, attempt to protect his business while opening fire on would-be rioters with a 12-gauge shotgun. No, I’m not here to tell you that things are fine. Things are not fine. However, I am certain, without a shadow of a doubt, we will eventually move past this. Yes, things will look different, businesses will be gone, new businesses will arrive. We may prefer staying home rather than going out.
Recently, as a way to say thank you to our staff and spouses, we held a dinner at our home, catered by a young man who was previously a restaurant chef. He’s now doing private parties. The cost was the same, or less than it would have been to go out. It was wonderful. Different, but wonderful. He is now growing a business and is basically becoming a mobile restaurant. RV and camper sales are the highest they’ve ever been in history, and a friend who builds outdoor hardscapes and pools can’t keep up with the demand.
Yes, it is terrible that the local pizza shop may not make it. I, too, am saddened that a local clothing shop, furniture store or bookstore will succumb. However, we’re once again fixing our cars rather than replacing them, which has mechanics and parts suppliers seeing a boom they haven’t experienced in decades. In an attempt to eat healthier, and thus increase our auto immune systems, we’re buying more local produce, and it is my understanding that local farmers are having a hard time keeping up with demands for beef and poultry.
Yes, it is frustrating not feeling comfortable leaving our homes; yet, the other day, I ordered bars of soap and toothpaste from Amazon, which was delivered to our house by an independent delivery person working at a side hustle. Amazon is one of the largest companies in the stock market.
We’re losing something in this country. Many think we’re losing our ideals, many believe it’s our values, many are concerned that it’s our work ethic. While it certainly seems like each of these are in question, what I believe we’re losing the most is our optimism. Sure, when asked specifically, I’ve not met a single person who doesn’t say, “Oh, we’ll get through this, yes we will.” But, the reality is, our collective actions are the farthest thing from reflecting this opinion. Each and every day, I tell my children to “make it a great day.” My goal is simple. They are not a product of their circumstances, but they are in charge of their destiny, regardless of the situation.
Despite all of the challenges we currently face, the markets continue to chug along. Businesses continue to grow and opportunity exists today more than ever. I made a bit of an Internet splash with an interview I did regarding Tesla. You can see that interview HERE. Basically, my goal was to give credit where credit is due. Faced with a majority of skeptics and naysayers, Elon Musk has managed to revolutionize not 1 but 2 industries. Despite all this, people still chide him, as if he’s a child and an unrealistic visionary. I’m guessing people made fun of the Wright brothers, Edison and Ford as well. History will remember Musk.
Friends, clients, associates and family. Please let us not forget what made this country what it is today. Yes, it was rooted in a value system, an unwavering faith, discipline and a strong work ethic. Through all the challenges, the uncertainties, the dark times and bright, the common thread among the great people of our nation has always been an unwavering optimism for the future. Let us never waiver in this!
General Housekeeping
A quick glance at accounts will continue to reflect our view on the current environment. Since I have heard from many of you already, I, too, am pleased with where we stand for the year and our courses of action throughout this crazy time. I fully anticipate further volatility as we enter the peak of election season and will make our moves accordingly.
Until next time