Common Cents & Anger on November 22, 2019

Too much self-centered attitude, you see, brings, you see, isolation. Result: loneliness, fear, anger. The extreme self-centered attitude is the source of suffering.
Dalai Lama

The media outlets are currently full of anger. It sells. Still, I can’t remember a time when the entire world seemed as angry as it does. Perhaps I am waxing nostalgic over happier times which actually weren’t. Then again, maybe I am not. The world seems at war with itself, from Argentina to Chile to Hong Kong to Venezuela to Bolivia to Lebanon to Egypt to the yellow vest movement in France which won’t go away to, well, our own internal divisions. This to name a few.

This week, my father asked me a litany of questions. These include, but are not limited to the following: “how much longer can the stock market keep going up? What kind of impact will this impeachment mess have on it? It can’t be good, can it? Those people really hate each other, don’t they? How can that be good for the country?” He had a lot of questions, and no shortage of opinion to boot.

I had but one basic answer, and a number of different ways to express it: “ultimately, investing comes down to how much money are you making today, and how much money will you be making tomorrow!” Only those things which can impact your ability to generate a profit, in the present and in the future, ultimately matter. As the old saying goes: “money talks and [baloney] walks.”

With the possible exception of the protests in Hong Kong, it seems much of the discord across the globe boils down to people believing they are, or will be, getting [the short end of the stick]. They have ‘taken all they can take,’ and even the smallest indignity or perceived slight will set off a major conflagration. What is the lyric from that old Bonnie Tyler song: “sitting on a powder keg and giving off sparks”? That seems about right, although I can’t believe I pulled a Bonnie Tyler lyric out of thin air so easily.

If this is the case, it seems investors don’t believe today’s anger will have much of an impact on corporate America’s ability to make a buck moving forward. Of course, that can change with the drop of a hat or the burning of a building.

As I have written here in the past, successful countries and economies have several things in common: 1) the government’s adherence to the rule of law; 2) strong individual property rights, and; 3) the effective development of human capital. Periodic strikes, protests, riots, and general unpleasantness? While momentarily destructive, they ultimately won’t move the longer-term ‘profit needle’ UNLESS they impact those 3 characteristics from the first paragraph. Shoot, protesting/railing against a tyrannical system in an effort to attain the rule of law, individual property rights, and the development of human capital is virtuous and ultimately profitable.

With this in mind, perhaps people feel they are falling behind when others are moving forward, presumably unfairly; you know, perceived inequality and injustices. While there might be much truth to any one individual case, the problem with inequality is no one believes they are the cause of it. What’s more, it is almost impossible to define in absolute terms. Societal and economic differences take on many shapes depending on location and time.

For example, according to data I found at, the 40th percentile household in the United States in 2018 was $50,000. The top 25% started at $130,000, and the top 5% of households made $248,728 or more. On the other side of the coin, the bottom 25% made less than $25,600.

So what? The so what of it is pretty simple: go tell a couple who each making $75,000/year they are part of the problem. Shoot, tell them just the one $75,000 salary puts them comfortably above the median for households in the US.

Understandably, they would respond with something along the lines of: “don’t look at us, man. It is that Top 5%, making almost $250,000 per year that is the problem. I mean a quarter of a million! That is where the inequality starts, not with the two of us making $75,000.”

So, you march off to the family making $248,728 and tell them they are the problem with inequality in America, and they would stare at you cross-eyed: “you can’t be serious, us? Do you realize how hard we both work and how expensive it is to live? It is that Top 1%, those folks over there making in excess of $400,000 who are the problem, not we?”

What do these people say? Variations on a theme, is what. Unless you are Jeff Bezos or Bill Gates, it varies by the day, there is always someone wealthier than you in the country. You can always point to the problem and never have to hold up a mirror. Then there is the simple truth: that $50,000 40th percentile family in the United States would live a very comfortable lifestyle in places like Chile, Ecuador, Bolivia, Egypt, Lebanon, etc., where people have taken to the streets over perceived inequality and injustice.

Please don’t think I am being cavalier on the subject of inequality. It is real, and it is relative. Only sometimes is it absolute.

When it is absolute, historically, societies have gone through much upheaval, often very bloody, to correct it. This correction normally takes the form of bringing the top, the means of production if you will, down. That has the greatest immediate effect, and, dare I say, is far more satisfying for the masses. They got theirs and all of that. Unfortunately, if everyone owns the means of production in an economy, no one owns it. As a result, said means again become concentrated in the hands of a few, and the whole process begins anew.

Basically, the ‘Top’ doesn’t change, just who is in it. The same can be said of the recent circus in Washington. How much do any of these people have in common with that $50,000 household at the 40th percentile? The single mother in Chicago with hungry mouths to feed? The rural blue-collar family in DeKalb County, Alabama, who just wants to be left alone? The divide and animosity between political parties in Washington and our media centers? Everyone looks the same, talks the same, and acts the same. It reminds me of a lyric, again with the lyrics, from Tom Petty’s song “Here Comes My Girl.”


Yeah, I just catch myself wonderin’, waitin’, worryin’ / About some silly little things that don’t add up to nothin’


That is the unintended root of the situation here in the United States. Although people seem at each other’s throats, they really aren’t, at least not the average person on the street. The real vitriol and anger in the country seems to stem from, interestingly enough, the top. The so-called deplorables? The working families who have opted out of political discourse, and these numbers are growing? The faceless middle-class everyone seems to care about? Perhaps Donald Trump can owe the White House to at least a subset of these people. However, their ‘extreme self-centered attitude’ hasn’t peaked yet. It hasn’t quite reached the true point of extreme loneliness, fear, and anger…not yet.

You see, relative to those countries which have erupted in violence over the last couple of weeks (much of South America and the Middle East) we still enjoy the rule of law, individual property rights, and the development of human capital. However, I will let you decide whether we are currently strengthening these core tenets of a healthy society and economy OR are we weakening them? Hmm.

So, going back to my dad’s questions: “how much longer can the stock market keep going up? What kind of impact will this impeachment mess have on it? It can’t be good, can it? Those people really hate each other, don’t they? How can that be good for the country?”

There is no reason, at present, for us to worry about the long-term health of the US economy and financial system. At some point, we will have a dip or a slip, but it shouldn’t be a death knell and we will come back stronger than we were. That is what we have done in the past and what we should be able to do in the future…if only we can put aside self-centered attitudes and those things which lead to anger. It is destructive, and can tear a society and economy apart.

With this in mind, while it may seem as though everyone in the country is angry, those people to whom our governing class panders and also ignores aren’t angry enough, yet, to have a significant negative impact on the prospects for future corporate profitability. I suppose you could say we haven’t eroded our core strengths enough, even if it may seem as though we are trying like crazy to do so.

As such, investors believe the future remains sunnier than the past, at least for now.

Have a great weekend.

John Norris