Besides computers, there are other indicators to assess how your car is performing, not revealed by computers and only during your driving experience itself. Does the car pull to one side (tire pressure low or out of alignment), are the brakes mushy (maybe low on brake fluid), did the engine suddenly start to sputter then stall (probably out of gas), or how do people look at you while you drive by. However, despite all the sources of information, our feelings about our car and decision to keep the car can be influenced by simply peer pressure or how comfortable the seats are. It may run great, but ending rides with a sore back is a non-starter.
Excluding last April’s 0.1% MoM decline, this has been the longest consecutive run of monthly gains in factory orders in 30 years.
Following April’s 2020 significant drop in factory orders, businesses have not only recovered but now, after 23 consecutive monthly gains, are placing orders at all-time levels. This is a good indirect commentary on the health of consumers and businesses (buyers) that are driving the rising demand for products.
We referenced the all-time high of corporate productivity in the Brief, “How Productive Are We?”. We noted in that Brief,
“The Bureau started tracking US labor productivity in 1940 with the first-year baseline of 100. For the past 81 years, the US has consistently improved its productivity, which is partly due to more laborers (more workers, more production). Note the surge in productivity during the 1990s into mid-2000s as the influence of new technology began to show its value for businesses.”
Managing your investments and building wealth by feelings is a fool’s errand. We are the fiduciary advisor to retirement plan trustees representing over $100M in participant accounts. In observing participants, we noted that those with the highest trading activity typically had the lowest returns. In fact, one participant has a record of a zero-dollar account gain in 8 years. Not 0% but zero gain in his account balance. Meaning, that this participant has consistently bought and sold at the wrong time so often that his losses consumed his 8 years of his own and employer matching contributions. If he had kept his account in the money market with a 0% interest rate, he would at least have his original balance plus contributions. We encouraged this individual to stop reacting to the news but to no avail. He since retired with the same retirement account balance he had in 2012.
I can understand the need to sell your car because it is getting older and not as impressive even though it runs great. Pride is a powerful influence. The US economy is doing well and even better when compared to most countries. However, the technical-economic reports seem to be missed by the main media, whose recent doom and gloom focus is the interest rate yield curve inversion – when short-term Treasury rates are higher than longer term Treasury rates. A concern, yes, but not a harbinger indicator for a pending recession. The feds are raising rates to slow inflation. 30 Year Fixed Mortgage rates hit 5% today, which will slow the residential real estate market. The media has been focused on the risks of 1980’s “hyper” inflation, and people complain that residential property values are at extreme levels. The fed’s raising rates will slow both down. Investors know this is good policy and why the Dow Jones Industrial Average soared 1300 points the day the fed’s raised its discount rate.
Give us a call or send an email if you have any questions about this Brief or your account. We welcome the opportunity to assist you with your questions and your pursuit of financial independence.