The white coats are saying people feel good: we all have jobs, inflation is low and the finances of our government are improving.
Consumer sentiment is the highest it has been in years. The household savings rate is improving but, to be fair, consumer spending is flat. I view all three of these as good things.
We (almost all) have jobs. Initial unemployment is the lowest it has been since 1973 (1). And, the unemployment rate may decline further. Rural areas are finally seeing job growth.
Inflation is still low. The all-encompassing measure is under 2% and the inflation measurement that eliminates the outliers (namely healthcare inflation) is 1.6% (1).
Finally, the government financial situation looks better than you might think. The Fed’s balance sheet continues to shrink. Money supply–which many economists believes causes inflation–is shrinking. Loan growth is increasing, meaning we feel confident about the future.
But do you feel good? Really? Are your feelings in touch with the statistics or does it feel out of alignment?
One of the keys to being a good investor is not acting on our feelings. It’s so easy to say that and so hard not to act, isn’t it? We are bombarded every instant of every day with reasons to act.
Don’t allow yourself to be bombarded. It’s ok to tune out the “news” on the web browser and television. You may not find an actionable item in any of it.
Instead, try any one of these three activities if you feel the need to take action.
1. Learn more about what your financial advisor is doing and how we are making investment decisions by scheduling a time to meet.
2. Exercise. The correlation between financial success and physical health is positive–even if there is no causality. That is economic-speak for “it doesn’t hurt to get outside and get active.” If nothing else, you’re going to improve your overall health and wellbeing.
3. Read a book. Instead of anything electronic, or newsworthy, or recent, pick up a book. Pour yourself a warm drink. Read. One of my favorite quotes is from Amos Tversky, one of the world’s most brilliant financial brains. He said, “you can waste years by not wasting a few hours a day.”
(1) Wall Street Journal, April 2, 2018, “The Daily Shot Newsletter,” by Lev Borodovsky.