By Miles Clyne
What a day! Or, what not a day. Do you choose how to spend your day or is it being dictated to you? Are you proactive or reactive? If I drift into the reactive mode it becomes challenging. I get edgy, irritable and I’m feeling one step behind. I feel the stress building, then the endless loop of stress on stress starts.
If this sounds remotely familiar, check your behavior and what is happening in your day. All sorts of things piling up and needing your attention at the same time? If you want to try and shake a good amount of stress, think about the benefit of being proactive. Honesty with yourself can be brutal. We all have the amazing ability to justify our behavior, good or bad, to ourselves and anyone else who asks.
What does any of this have to do with the stock markets? Lots actually. If you are remotely active in investing, you know the benefit of being proactive and finding the next Amazon or Netflix. We also know the risk of owning the next Blackberry or Blockbuster and not getting out soon enough. In the markets it can be very important to be proactive. And it can be very stressful not having a clue when the next situation is going to happen that could hurt you.
Here is a brief summary of global events over the past several months;
• By the end of 2018 the markets were in a fever over fear of a recession.
• The chatter faded and a short and rapid rally happened.
• We were told that going into 2019 interest rates were going to keep rising.
• These fears didn’t materialize.
• Global growth is still expected to be slowing but not getting into recession territory.
• Now for the first time in over a decade we have a yield curve inversion, where the 10-year GoC yield is at 1.73% and Bank of Canada overnight rate is at 1.75%, inversions like this suggest the risk of recession could be looming.
• In spite of lower global growth, and an inversion in interest rates in Canada, oil prices are on a steady comeback at over $58, and this is up about 30% from the end of this past year. This suggests inflation, not recession.
• Are you confused yet?
Just like other stresses in our day, we don’t know when or what the next issue will be for certain but we do know some of the common things that could come knocking on our door. Knowing how we are going to deal with issues most likely to happen is critical.
We deal with market stresses by knowing we work in a wildly unpredictable environment. Everything can be running along very smoothly, then wham, a storm hits. It may literally be a natural disaster that disrupts global markets like the earth quake and tsunami that rocked Japan a number of years back, or a global leader changes the direction in how they do business. We are proactive in that we have a process that more often than not works to deliver better returns with less risk than the markets. We stick to the plan and react accordingly when the unpredictable happens.
In our day to day lives we need to have a host of plans. How we deal with family issues like meal planning, laundry and maintaining our homes as well as modes of transportation. How do we cope with a new boss that we don’t see eye to eye with and an ugly commute each day that is beating us down day by day?
What we have to plan for in our lives is almost limitless, but there is a common thread. The Boy Scout motto says it all, “Be Prepared”. In living with the chaos in the markets, stress would have removed us long ago if we had no plan. We are not naive, we know we could be one election away from crazy, one check engine oil light neglected away from a major repair bill or you name it.
We all need to find our way in this world, what works for me and will work for you may be totally different. But we most likely have at least one similar goal. Less stress, more happy. We are not alone.