By Brad Thomason, CPA
 
When you are working as an analyst – professionally, or in your daily life, even doing something mundane and inconsequential like sorting through Yelp reviews while looking for a place to eat lunch in a town you just happen to be passing through at lunch time – the fact that you are looking at data makes it easy to lose sight of another fact: every one of those data points within the set came from somewhere.  Every one of those data points is the result of something actually experienced by a firm or an individual.

COVID case numbers come from real people, sitting at home with an absurd fever, thinking that this stuff really is as torturous as they say.

Unemployment data represents people trying to find work to feed their families, and not being able to do so.

Even those Yelp reviews (presumably) represent actual food put on actual plates and enjoyed, or not, by actual people; one meal at a time.

Point being that while data in its accumulated form is a practical way to get general impressions, it necessarily strips out much of the information associated with the origin story of each data point.  It sort of has to, if you think about it: otherwise, the analyst would be overwhelmed with information and not able to do anything in the way of drawing conclusions and contemplating decisions.

But in the face of all that, it is nonetheless important that, while the data might differentiate simply between employed and not employed, there is a whole lot more to the story.  Every story. Every single one of them.  Perhaps millions or even billions of them.

So with that as preface, at the level of data, what can we say about the impact of the last 17 months?
We can say that it has been a period where the productivity of the human race was reduced.  On that score, I don’t really think there could be any legitimate argument.  I also think any reasonable person would have to admit that is a monumental event/development/occurrence, one which is likely to have truly far-reaching impacts which in some way or another touch many lives.

But which touch points? And how many of them? Well, that is the question, isn’t it.

Our particular interest in this space is the impact on investors, both retired and preparing.

Some investors will experience changes in income dynamics of interest payments or dividends.

Some investors will see changes in valuation, and these may not be completely sensible, nor single point events. Some will see asset prices drop to levels that seem ridiculous based on the fundamentals, while others will see the opposite.

But those seeing the opposite shouldn’t rejoice too soon, because a frequent trick that the market likes to pull is the run-up-and-stall. It seems like huge growth in one year, but it’s followed by a period of essentially nothing (in other words, some wobbling – quivering? - but no net movement).

Or worse, it comes back down later.

Project-oriented investors might have to delay their development timeline. Business owners may have to re-capitalize, switch product mix, or adjust employee complement up or down.

And so on. What this means is that we should a) expect pretty much everyone to be impacted and b) expect that the particular impact to differ literally from one person to the next.

​I also think the financial ramifications of this period have not fully played out. So even if you haven’t yet felt any negative impacts, you shouldn’t be surprised if some show up later. Hope for the best but be aware it could still go the other way.

It is at these times that the value of a well-formed plan is most obvious. When unexpected events occur – good or bad – having an unchanging portion of the picture is extremely useful in figuring out how to react. Having already worked out what you want to do ahead of time, you can simultaneously wear your analyst hat, trying to discern what happened to everyone, as well as your data point hat (because after all, your particular story is one of the ones that makes up the data set), tracking which decisions are most important to consider and which actions are most important to stay, or get, back on track.
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​Alternately, if you don’t have such a plan, now is a good time to form one. After a disturbance is actually a more calm place to operate in than you might imagine. Moreover, it sets you up to be in a better position the next time the dealer tosses out a wild card; an event history tells us we should assume is coming again at some point, in some form. 

By Brad Thomason, CPA
 
When I was a kid, my dad was a devout and utterly consistent watcher of the daily news. National and World news at 5:30 (NBC, with John Chancellor; and later Tom Brokaw) and local at 6:00 and 10:00.

On slow news days, when they would have stories involving some celebrity, he would often remark, “Are we supposed to know who that is?” It would drive my mother crazy, and she would make some aggression-less criticism about him being out of touch. He would usually reply with OK or Whatever. It had the rote feel of the sort of call and response exchanges that are often part of religious services.

The Lord be with you…

Well, I don’t think it’s strictly genetic, but I have become aware in recent years that I frequently see headlines about folks who, by context, obviously must be celebrities. But I have no idea who they are. I see articles in business publications about how people over 30 feel like they are losing touch with culture and, by proxy, reality. How they feel insinuations of obsolescence even as they are only reaching the age that for decades (at least) signified the point where most were just starting to hit their stride. It is accepted and unchallenged dogma that we are living in a fast-paced world where little remains as it was and that the present gives way at break-neck velocity to a future so dynamic that nothing which came before could possibly hint at what’s to come next.

​But is that what’s really going on?

In the midst of new technological innovations and rapidly changing popularity of this idea or that person, it’s easy to get lulled into thinking that there are no sands but the shifting sands.

But haven’t younger musicians, actors, athletes been replacing older ones for as long as you’ve been alive?

Isn’t the idea of ‘this year’s fashions’ an ancient one?

Doesn’t gravity, electricity, photosynthesis, lunar orbit and the desirability of honest – to - God backyard tomatoes still work the same as always?

And as for innovation, does the umpteenth new social media platform really count? I mean, how many different ways to stay in touch does the human race really need? And whatever that number is, haven’t we already surpassed it?

The hallmarks of good financial management that existed on the day you were born remain the standards today: work for what you need and want; live within your means; prepare for the day when you won’t be working anymore so that you can still live comfortably without burdening anyone else.

Now it’s certainly true that the chaos of popular culture finds its way into the financial markets from time to time. New investors enter the market and presume that all of the existing players are morons; speculative frenzies – GameStop, Bitcoin, Tesla – catch fire, only to be set down later for the next hot issue; politicians say and do things to pander to voters looking for ‘new ideas’ and not-stale leadership. So, we can’t ignore these things altogether.

Still, we can’t let them trick us into thinking stability and inertia no longer exist. Many of these elements of change are just the latest versions of what the world has seen many rounds of before, no different than the changing crowd of performers that gets invited to the Grammy’s every year.

The risk here is to assume that if you don’t keep up, if you don’t have the latest financial app, if you aren’t fluent in crypto-currencies, if you aren’t monitoring what’s coming down the pipe, then you are per force falling behind, with ever-dwindling hopes of being able to cope with the world. That the prospects of success are dimming before your eyes, and that basic survival itself could be next.

My advice: don’t fall for that. It isn’t true. The game is still about what it was always about: having enough money to pay for what you have deemed to be your version of a comfortable life. The delivery of financial and economic information may have changed, and the current data may be influenced by current fads, but the core machinery is as it always was; making it just another aspect of the world that is much more prominent than we sometimes realize.

When I cook a steak over a charcoal fire it works the same way it did when I was 20. When I fish a stretch of shoreline, I find that hooks and tree branches still have the same affinity for each other that they ever did. Dogs manage to hold on to the image of being obedient, despite a compliance rate far less than 50%. Have things changed? Sure. But not everything; and maybe a lot less than we sometimes think. Especially when it comes to the stuff that has the biggest impacts on our lives.

​I’ll stop there. Going to go out and throw the frisbee with the kids for a bit. Have a nice day, and perhaps a warm beverage, too. Come to think of it coffee and tea have lost none of their power, best I can tell. Something to think about.