Do you ever notice how tough it is to really feel what it was like on 9/10, the day before the 9/11 attack on America? So often now we move form problem to problem that reality tends to get lost, well, in the summer haze.

I would argue that pre-9/11, we thought in terms of potential and possibilities.
Today we think of problems and hurdles and risks.

That sounds simplistic I know but it seems too many have become lost in that haze. I suppose in the end though, it is required. For markets to rise over time, we must always have a ready-made batch of pessimists.

Count us on the opposite side of that fence and trust me when I say this:

There are very few people on our side of the fence – and that is really good. So as all of us here at Demogronomics wish for you and yours an enjoyable weekend with loved ones and friends, we send you off with a few things to ponder until we see you again. I read stuff all the time – here are a few things I’ve read recently:

Coca-Cola is pushing against a decade long tide soda consumption decline. Its stock is at an all-time high.

Cigarette consumption has fallen 44% since 1981. Altria stock is up 71,000% since then.

Walmart was the “worst stock” last year as its’ new CEO was announcing a major restructuring across the board. In the meantime, net income there has tripled since 2000. Its stock has lost 1.5% over the same period.

Apple has rung the register for nearly a quarter trillion dollars in profits since 2012. The stock price since has barely budged.

Amazon’s profits are, let me see, carry the one, add 6, times 4.7 – uh, zero since 2012. That stock has tripled.

2009 was one of the worst years for the economy in a century. The market rose 27%.

2015 was a good year for the economy as we set all-time records in many important categories. The market rose almost 1%.

On the morning of yet another jobs number, we forget quickly that America is enjoying the longest streak of extremely low (new record lows at a few points) unemployment claims on record! Yet the media darlings want us to fret over the jobs number set to be released in hours – as though it will matter in a month– or a week. By the way, our stock market is also flat over the last two years.

Idea: Let’s spend less time listening to Wall Street analysts predict the outcomes ahead and more time dealing with underlying facts which are hard to escape.

Walking the Dog

Way back, years ago, I recall reading a reference to walking a dog. I might not retell it perfectly but it went something like this: This guy (the owner) walked his dog to work everyday a few miles from home. The location of his office never moved. It was at the same address the entire time, rain or shine. Same path, same street – same, same, same. Boring yes?

As anyone who has ever walked a dog knows, one can never tell where the next step will be – sort of like flipping a coin – or in Wall Street truth: guessing. You never know when your dog will stop to sniff a tree trunk, the crack in the sidewalk, the grass at the edge, a twig on the ground or an ant walking across the concrete. God forbid they see a squirrel vaulting up a tree three blocks ahead or get spooked by a car horn or fire-truck heading through traffic. The point? The dog’s walk is all reactionary…moving to and fro – all the while, the owner is heading to the very same address every single day.

All investors eventually must recognize the analogy: Let’s focus on the owner (companies) and not the dog (markets).

The Need to Know

Do we really need to know everything? Do I need to know every single economic tidbit? Every report’s angle? Every missed penny or nickel over time in an earnings report?

No…I don’t – and neither do you.

It is my humble opinion that this is the entire Wall Street trick. Lead the investor – large and small – to believe they know something you do not. Make it sound important, use terminology that often means little more than “I went to Harvard” – and then explain how much it will cost to put that newly created fear at ease. It’s all about the tension the wizard behind the curtain can build over time.

The fact is somewhat different if one is willing to separate themselves from the noise:

A large portion of a solid stock portfolio can prosper for decades without touching it.

Owning and holding a set of high-quality companies with a significant foundation of coming demand is not a like a push-button game with constant action and reaction. It is not the dog in the story above.

The process we strive for is that it should be as hands-off as one can manage emotionally. The benefit of focusing on the Barbell Economy is also the biggest strength of any long-term investor. It permits you to not have to trade, fiddle around with the positions all the time, recheck every quarterly report and demand daily monitoring.

We just count people, study waves of demography and plant seeds in the middle of those pathways, letting businesses earn profit and accrue value to their owners (shareholders).

The WWAV buyout yesterday was another perfect example. How many times do you think they missed by a penny? Had a missed production level? Got bad headlines on XYZ media channel? Or, did not hit the expected margin points of the analysts on Wall Street? Plenty…

Did any of that change the fact that tends of millions of people between Gen Y and the Baby Boom decided to start eating healthier?

Stop the fretting and the angst. Let’s move back to potential and possibilities – they are far more productive for investors over time.

Speaking of the Future….

We may not realize this but we eat up our future one day at a time by focusing on extreme levels of fear, extreme levels of possible outcome – only because of the most recent decade or two in the markets.

All the while, the aspect of compounding results is completely overlooked by a vast majority of the audience – often too busy focusing instead on the headline of the morning.
An Example: The jobs number this morning.

There are only two outcomes the media will focus you on:

a) the number is worse than expected
b) the number is better than expected

(UPDATE: This just in – Boom: Jobs report knocked the lights out – more in your weekend note)

If it is (a), the very next headlines will have to do with the Fed being in a corner with no bullets left, a failing economy, the effects of Brexit, the hollowing out of the middle class, buying gold or bonds and the loss of jobs for years to come.

In minutes, it will be bad for us.

It if is (b), the very next headlines will be the shifting landscape on an assured rate hike, the hawkish tone of the Fed, the fact that they are late, the rising dollar hurting profits for companies and inflationary pressures.

It will also be bad for us.

The laughter you hear is because you know in your gut how foolish this has all become.

Remember this:

The future is set to make your current fears seem minuscule, even irrelevant. Consider that just a few days after the Dow crossed 100 way back in 1942, it fell 2.9%, from 106 to 103. This three-point move was a huge deal at the time. As a percentage, it would be the kind of stuff we’d have special reports for on the nightly news today.

But three points is 0.01% of today’s market — utterly meaningless.

Or how about a recent example that every finance textbook teaches: the Crash of 1987 was one of the biggest market events in history. We all know the Dow fell 508 points during the crash, which was extraordinary – and potentially world-ending – back then.

But now? That point total is regularly seen in the movement of the Dow over a smattering of days.

The Sky Is Not Falling

Over the next 3, 5, 10 and 20 year periods, we will very likely pause for a moment and look back on the haze of 2015-2016 with a largely different understanding than we have today. What has felt like a long walk through a vast field of quicksand, with a market that has effectively been stalled, will be seen instead as more like a pause, a lunch-stop if you will – a foundation, not a top.

This tug-of-war is the start of good things – a turning point for the better, driven by the largest economic event to ever hit the United States – or the world for that matter.

The Better News?

Corporations and business channels will adjust far more quickly to Brexit than governments and will make the necessary changes to their strategic plans quickly, this even without knowing all the details of the new rules, trade agreements and regulations.

The surprise? Brexit’s impact on earnings for U.S. multinationals longer term will be minimal – if not actually beneficial – despite the massive fear that exists to the contrary.

Cutting Through the Garbage

The process can be simpler.

We study people. Where are they, where are they headed and what do those stages of life normally entail? No, that does not mean every single person, in each of those bell curves, at every stage of life, will do the exact same thing. Of course not. But it does mean one can then logically understand more likely long-term sector tailwinds and headwinds.

Boring yes….but effective over time…

And then, letting it work….is the hardest part of the task.

The most uncomfortable thought of all (repeated to drive home the point):

The US economy has so far survived some of the worst set of fiscal policies imaginable over the last 7 years.

In spite of that, we can thank our demographics as our economy is set to get even stronger – for years and years – not weaker.

More later –

Until we see you again, may your journey be grand and your legacy significant.