Back in 2012 I was a reader of the bearish financial blog ZeroHedge. It’s a hard thing to describe if you haven’t read it, so I’ll just use the tagline: “On a long enough timeline the survival rate for everyone drops to zero.” My sense back then reading it was that the economy was a house of cards that would soon come crashing down.
That didn’t happen back in 2012, or in the years since. But I did, for a brief three month period, move my budding 401K savings to cash and attempt to time the recession I had been told was coming (I think the signal had something to do with used car prices). The S&P 500 that year returned 16%, making my three month hiatus a losing proposition. Luckily it only lasted that long.
The obvious lesson back then was that timing the market was impossible for someone like me. If I was going to make decisions blind, on the recommendations of others, then I’d better do some research and find the right recommendations. That led me to a handful of excellent personal finance resources like Ezra Klein’s financial flashcard, The Intelligent Investor and Jack Bogle, all of which suggested that I was much better off investing consistently, through thick and thin, than I was moving my money around on the basis of some conspiracy blog. In ZeroHedge speak: “On a long enough timeline the economy grows and so will your diversified investments.”
One benefit to this approach is that potential bubbles are no longer as stressful. Back in 2012, that wonky used car market had me sweating at my desk, despite me being well-positioned, with little savings and decades of earning potential ahead of me, to recoup my losses and take advantage of bargain stock prices. Not to mention the fact that I knew nothing about cars or what would constitute a bubble in their prices. If I’d been more level headed I would have taken one look at the blog and seen it for what it was: noise.
This is particularly important today, surrounded as we are by S.W.I.A.B. – Signs We’re In A Bubble – a term coined by a coworker in response to the 800% two day gains of Digital World Acquisition Corp, the SPAC taking Trump’s new media company public, but equally applicable to a whole host of things:
- Buy Now, Pay Later 0% installment loans
- Meme stocks
- Crypto fraud
- NFTs of all shapes and sizes
- The proliferation of direct-to-consumer clothing startups
- The custom shampoo company Prose and the publicly-traded Bark Box
- And the latest, which came to my inbox this morning – Bed Bath & Beyond available for delivery on DoorDash:
Maybe none of these will turn out to be the signs of a bubble about to burst. I’m certainly not the one to predict it if so. And taken individually, a lot of these things have value. Bark Box sells great dog toys and has an excellent, consumer-friendly website. Borrowers benefit from free short-term loans. There’s probably even a bull case for Trump’s DWAC.
But taken together, it all seems a bit ridiculous, doesn’t it? Why would DoorDash deliver Bed Bath & Beyond? How does that make any sense? And does Prose really need to market on subway trains? How many people want a $25 “custom formula” for their showers?
It’s hard not see this stuff and think about the articles people will write, decades into the future, listing the outrageous things we were doing right before the music stopped, when money flowed freely. The dot com bubble had its flooz.com, and 2008 had strippers with five houses. This time will be no different: Meme stocks will make for good television one day, as will cryptopunks.
In the meantime, I’m going to sit on my hands and do nothing.
The Great Saunter
Yesterday was the fourth walking of the Great Saunter and I’ve linked to old posts about the event. It’s my favorite day of the year and yesterday didn’t disappoint.
- An Ode to the Saunter
- Last year’s newsletter
Fall is here for a fleeting second and it’s the perfect time of year to be outdoors.
– Emmett
What I’m Reading:
Vagabonding: An Uncommon Guide to the Art of Long-Term World Travel – Ralph Potts
“It is easy in the world to live after the world’s opinion; it is easy in solitude to live after your own; but the great man is he who in the midst of the crowd keeps with perfect sweetness the independence of solitude.”
Never Wish Away A Minute of Your Life – Ryan Holiday
“Now is now! It can never be anything else. Now is your life. Live it. Love it. That’s all you can do.”
Becoming the Marginalian: After 15 Years, Brain Pickings Reborn – Maria Popova
“We bring to anything — a book, a love — the whole of what we are, projecting onto it every experience we have ever had and every unanswered question reverberating through the deepest chambers of our being.”