Land of Confusion
“Now did you read the news today?
They say the danger’s gone away
But I can see the fire’s still alight
They’re burning into the night”
Back in 1986, a British band named Genesis released a song called “Land of Confusion.” We mostly liked it for the drums and melody, but the lyrics have now (at least to us) become eerily relevant to our world of investing.
The war in Russia and Ukraine continues, the cleanup in Fort Myers begins, British pensions are erupting in uncertainty, China continues the Covid lockdowns, inflation endures ($9 salad at Chick-fil-A, seriously)…and all we seem to hear are fights between Elon and Twitter for ownership, what Kanye (or Ye) said on Tucker Carlson, and 6% mortgages.
The fire is indeed still alight, and yet the market still expects the Goldilocks environment to somehow magically return. It doesn’t appear the danger has gone away.
Genesis continues…
“There’s too many men, too many people
Making too many problems
And there’s not much love to go around
Can’t you see this is the land of confusion?”
The markets are always confusing, as it’s never really clear except in the rear-view mirror. 30 something trillion dollars in hock for our government (or is that us?), and interest rates continue to climb. The debt service alone may eat the budget alive, but hey, the Federal Reserve will bail us out, right? Just print more of those dollars, and we can just inflate the problem away, they say. So who wants to buy bonds now?
In the meantime, stocks continue to get battered, as the Dow has dropped 7,000 points (25%) from early January highs. Time to buy, right? Not so fast, says Ned Davis Research. We still have 20% more down just to get to median. If inflation and supply chain issues and a lack of employees has much effect on margins, then it seems pretty reasonable to expect lower earnings, right?
And if that is not enough, OPEC is cutting supply (they want a higher price for oil), grain markets continue to climb as corn is up 28% in one year, and much higher prices to heat your home this winter are on their way. Coal and heating oil are up over 60%, and natural gas is up over 20% in a year. And gas prices…
So stocks, bonds, commodities are all under assault. Too many men, too many people, making too many problems.
Again, Genesis seems prescient here:
“This is the world we live in
And these are the hands we’re given
Use them and let’s start trying
To make it a place worth living in”
Well, we could just give up and give in. Many have, by just handing it over to asset gatherers who dump the money into index funds, collect the fee, and just shrug and say, “What else can we do?”
We believe there is much to do with these hands we’re given. We can invest in medicines that heal, crops that feed, energy that fuels, and services that care for…people. We believe the future is bright, that diseases can be cured by directing our attention and investment towards biotechnology. We can help alleviate poverty by helping to provide basic banking services to the poor in Mexico and India. We can invest in real estate that corporately proclaims the Gospel of Jesus Christ.
We can start trying…
One more:
“Oh, Superman, where are you now?
When everything’s gone wrong somehow?
Men of steel, these men of power
I’m losing control by the hour”
There are no men of steel, but we do have a Superman. It may seem that everything’s gone wrong, and the news is filled by the hour with…bad news. But we will continue to look up, raise our gaze, and remember that we are caretakers, managers, and fiduciaries of His good grace.
Everything will be alright. We will continue to invest for the greater good in His name. We are certainly in a land of confusion, and even so, we will continue to work, and to think, and to believe.
1 - Song lyrics: Genesis. “Land of Confusion”. Source: Musixmatch
2 - Market Data: Koyfin Data, Daily Info.
3 - Ned Davis Research chart DAVIS100. August 31, 2022
4 - Mortgage Rates: www.bankrate.com
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