It would seem to anyone that’s been in business before the financial crisis of 2008 not only had the rules changed, but rather they changed so much even Alice would find our current looking-glass far more surreal.
It also seems that it wasn’t all that long ago where one thought that maybe, just maybe, to understand the craziness around you; you needed to ever so grudgingly accept the nonsensical mindset of “bad is now considered good.”
So, you adjusted your investing theses, your business plans, your whatever as to try to navigate these uncharted waters. Waters that emanated via the Federal Reserve opening (if not destroying) the dam and flooding the financial markets with liquidity so deep even Montana thought it had a new water view. To then suddenly all you bought into (literally) all you’ve been told. All of it – falls like the house of cards you tried to will (wish) away as if it weren’t true.
And there in lies the true crux of today. For a great many will rue the day when they bought into: “Pigs can fly,” “The markets are at these levels based on sound fundamentals,” “The Fed’s got their back,” and “Ebola is contained.”
It is astounding just how far behind the curve many are finding themselves. Suddenly, almost to a person I meet is either doe eyed, or worse, portraying signs of a deer stuck in the headlights.
Just look at these two headlines only weeks apart to give one clues as to why many they now meet appear in fact clueless:
Aug. 21st, “S&P 500 Tops Record, Nears 2,000 Amid Confidence in Fed”
Oct. 9th, “Top Investors See More Pain as 10% Losses Spread; S&P 500 ‘Painting a False Picture'”
Just these two latest examples put on display why one needed to be able to think clearly and not buy into the false narrative. Again, the problem is a great many are now finding their prior believing in that narrative is becoming clearer and more problematic because – they were not (or refused) thinking to begin with.
This is where everything is changing because the great masses whom many relate to as “the herd mentality” is now showing signs of great nervousness. And once this group gets spooked: It’s Katie bar the door time.
The issue that compounds this problem is what many more are realizing and never thought possible: The very real possibility of a pandemic that can actually affect them. Not just someone on the other side of a screen (or phone). But actually – them.
Again, this is where everything that seemingly didn’t matter, or was brushed off as “never gonna happen” suddenly turns into “Wait…what?” And there are many “Wait…what?” moments compounding one on top of each other.
In less than a few weeks the markets have negated all of the gains (and then some) for 2014 as we stand today. Are 5 – 7- 10% corrections out of the blue a normal thing? Of course they are. However, what makes this one different from the others? Easy – just look at the timing.
How is it that a market corrects in a dizzying fashion when all of the “fundamentals, fairly priced, economy improving,” etc., etc. are in place as everyone’s been told ad nauseam? Unless – it was a mirage.
And what makes a mirage a glaring reality is this: The very month quantitative easing ends – so to does an ever-rising relentless “bull” market with a sell off reminiscent of earlier crises exposing for all to see prima facie the house of cards it truly is.
Again: If these markets were based on fundamentals why the need for any concern? For concern there suddenly is.
On top of this comes the compounding effect where what was once seen as improbable begins morphing to not only plausible – but probable. Fear of an actual outbreak or pandemic. e.g. Ebola.
As we stand here today many are waking to differing headlines breaking out across the web and wondering: “But how? I thought, or, we were told….” And just like the above example with the markets – this also is where everything changes.
While the issue of “why or how” can be understood quite easily, it’s the compounding effect on one’s psyche as they look at both their financial well-being as well as their health and they cross once presumed separate paths. Where what they’ve been told no longer is in the abstract, but is both tangible, and all too real i.e., A 401K balance that suddenly is cut, along with headlines, “Dallas Hospital Worker Tests Positive For Ebola In First Person-To-Person Transmission On US Soil”
Now we have a confirmed Ebola case transmission between a care taker and patient that was not by casual contact, but rather to someone who was encapsulated “wearing full protective gear.” Along with a correction in the financial markets negating all the years gains where everyone was told “it’s a great time to be in the markets!” All in less than about a week.
For the one’s lovingly refereed to as “the herd mentality” this changes everything regardless of how the main stream media will try to push a differing narrative.
And that’s if they want to push a “don’t worry calm down” story line. For we all know “blood in the streets” sells, and what the media needs more today than yesterday is anything that sells. So I wouldn’t look for anymore rainbow and unicorn puff pieces on the markets or health concerns anytime soon.
As a matter of fact I won’t be surprised if the drumbeat of panic not only intensifies – but gets turned up to 11 by this very same band of cohorts that just weeks ago were touting: “Everything is beautiful man!”
When I first began to raise serious concerns on Ebola on just how and why the dangers that could manifest within an economy such as ours. Some regarded my thoughts as “throwing gasoline on a contained fire.”
At the time it was a fair criticism (although I stand by my article and thoughts) because many just can’t get their heads around what they themselves see as “unlikely.” Until it is shown not only as possible – but probable. To wit:
That’s not hyperbole, nor is it not something as a “well that’s what they say but will never happen.” No, that’s now law, backed up with the enforcement of by any, and all means at the disposal of a government body. Period.
Suddenly everything I outlined in my last article as possibilities to ponder, or at the least; a business owners (regardless of size) need to think, understand, and be proactive as to deal with possible disruption scenarios has moved from some meaningless exercise to be done in the abstract – to the very possibility they could be realized at any given time. Regardless of geography.
An example of what I was trying to convey within this construct is this: What most don’t understand is that many of the very people who an advanced economy rely on for keeping an infrastructure running require mobility. i.e., The crisis team that fixes large-scale power outages, maintains water treatment facilities, ____________ (fill in the blank) travel from job to job. They are very specialized and usually run in teams.
What happens if an embarked team to repair a water treatment facility that is shut down due to unresolvable circumstances (for lack of critical expertise) is aboard a plane that has a similar episode as the one in Philadelphia; where a passenger prompted an entourage of hazmat suited personnel?
What if that happened in Connecticut today? And it just so happened the very people needed to repair that scenario of a water treatment facility are also aboard? Now what once seemed improbable becomes very real and a whole lot more plausible. Along with its disruption and impact to a great many more hundreds if not a thousand miles away.
Do you now still send teams or people in groups? Or do you split them up? Do you fly them on different planes? Do you fly them at all? Do you now send some via air while others go via ground transportation? Where do they stay? All at the same hotel? What does this do to once accepted costs? Can you charge accordingly? Can they pay?
All these questions are very real, and the list goes on, and on. And not just for this skill set, but for a myriad of others across an advanced economy.
As one can clearly see. It not only changes the lens of how one has to view this economy, but rather, it might be prudent to look through a whole new set of glasses.
And none of them had better be rose-colored.
© 2014 Mark St.Cyr