TGIF – Unstoppable Forces

Hands typing with matrix numbers over it

There is a Revolution around us and it is digitally driven. Things happen so much faster today and spread far and wide. It has completely changed the way we live. Network connectivity spans the world and access is always open.

Last month marked the 30th anniversary of Black Monday, the day the Stock Market crashed over 20% in a day. That was the equivalent of the DOW falling 5,000 points; in a single day! Many didn’t even realize the Market crashed until they read it in the paper the following day. Today, a mere 1% sell off causes angst. We haven’t seen many of those this year, though it happened this week. It’s the nature of this Digital Age.

There are a number of unstoppable forces in motion. Some are good, others not so much. The ability to communicate with family, friends and for business is cheaper and easier than ever. E-commerce makes shopping easy and efficient too. Cars are more reliable and powerful and fuel-efficient. Industries operate so much more efficiently now and aren’t buried in paper like decades past. The digital age has also made it easier to hack into accounts and networks as well as form terror groups. Cyber-warfare was given birth in the digital age.

Another unstoppable force that seems to be plaguing our society is the collapse of legitimacy. There is very little trust in traditional institutions and authority. It has been building for decades, perhaps born out of the handling of the Kennedy assassination, Watergate and Vietnam. It gained further momentum with Iran-Contra and Monica Lewinsky. It’s the very thing that the Russians have been targeting. When you turn on Cable News you see completely different broadcasts, generally with polarizing political perspectives, depending on the channel.

The digital age has in many ways democratized access to information. It’s given pretty much everyone a voice. Power has been dispersed from the traditional institutions. Today’s information flow is stuffed with negativity. It’s all about catchy headlines and sound bytes. And I’m just referring to the tax reporting. There are so many alarming things coming out of Washington and Hollywood, way beyond tax talk. There is a clear crisis in confidence. Who can we trust? Americans have expressed their mounting frustration. Just look at these current Disapproval Ratings:

Media 70%
Congress 92%
The Presidency 67%
Big Business 79%
Banks 78%
Justice System 77%

Things that used to be considered reliable are losing. This is no longer
Walter Cronkite’s world. Network Nightly News ratings continue to slide. When’s the last time you opened an Encyclopedia or read a print version of Time Magazine? Ask a Millennial what an encyclopedia even is. What’s trustworthy? Studies show the Millennial generation do not trust traditional institutions or advertising. They trust peer recommendations and referrals. Friends and colleagues are believed to be more reliable and honest. Think about it, they’re coming of age in this polarizing world of negativity. It’s an issue for all of our younger generations.

Millennials seem to trust Amazon. They trust Google and social media too. It’s a peer-to-peer world they embrace. The Titans of Tech have become very powerful and influential. It’s been an unstoppable force. Traditional institutions have scrambled to maintain relevance in the digital age and the scramble continues. The real question is whether the government will jump in.

The theme on Capitol Hill is taxes and it is causing more argument. That is to be expected with government dysfunction. But listening should be expected too. Unfortunately listening, which is one of the greatest human traits, seems to be losing momentum in our great nation. Shouting gets more attention. Political and social divides are widening. Our foreign adversaries are reveling in our internal fighting. It’s not good. Internal debate is a critical part of our freedom, but only with respect. We are experiencing a re-set of globalization. When you think about it, the fall of the Berlin Wall didn’t work out for everyone. Some prospered mightily while others did not. This is a global issue.

We prefer to listen and think amidst all the talking. We try to get past the noise and focus on the substance. We see a solid global economy, which is accelerating overseas. We anticipate a tax deal ultimately getting done, but not in 2017. The Market expects it. We pay close attention to economic, political and social trends. The unstoppable forces continue to be investable, but we are very mindful of the costs associated. As an investor and a parent, navigating this current environment comes with fast-moving challenges. We are long-term investors who are always prepared for anything that comes our way.

Have a nice weekend. We will be back, dark and early on Monday.

– Mike

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