Why we can’t not invest due to fear and uncertainty. Plus how to tell if the stock market is overvalued and what to do about it.
In this episode you’ll learn:
- Why no investment is safe.
- What are the steps to get financially unstuck.
- What are the different measures for determining stock valuations.
- How the U.S. stock market is overvalued and undervalued based on differing measures and what do you do about it.
Show Notes
What the single best stock market predictor is saying now – Mark Hulbert – MarketWatch
Summary Article
The Powerful Play Goes On
We recently had dinner with some friends who were looking for a new vacuum cleaner. The discussion turned to which were the best brands.
I texted my sisters to see if anyone could remember the name of the canister vacuum cleaner we had growing up.
My older sister replied with a picture of the actual machine. It’s a Compact made by Interstate Engineering Corporation. She still uses it. It is over fifty years old.
The Vacuuming Pig
Interstate Engineering began in 1937 making airplane parts. Howard Hughes approached the company in the early 1940s about designing a vacuum cleaner to clean aircraft.
He needed something compact that would fit between the airplane seat rows and not lose suction when inhaling fine airplane dust.
Interstate designed an all aluminum model that they nicknamed the “pig” due to its shape. The motor was made by Black & Decker.
After the war, Interstate turned to the consumer market to sell vacuum cleaners. They used the independent franchise model where individual sales people went door-to-door selling the machines.
In 1962, one of those sales reps sold my mother the C-5 PB model shortly after she got married. It is a rare three-wheel Compact, turquoise, embossed with the picture of the world on its side and the words, “As new as tomorrow.” It was made in Anaheim, California.
I asked my mom if she remembers buying the vacuum or anything about who sold it to her. She doesn’t. Most of what happened fifty years ago if we were alive back then we don’t remember.
The Hitchhiker
Last night, LaPriel and I were driving home. We were just outside Newdale, Idaho about 25 miles from our farm, when we passed a hitchhiker.
I only caught a glimpse of him as we were driving by at 65 miles per hour. He appeared to be fiftyish, clean shaven and standing with a large hiker’s backpack.
I slowed and asked LaPriel if we should pick him up. She didn’t say no.
I rarely pick up hitchhikers. More often in Mexico than in the U.S.
My son and I had once stood hitchhiking with our backpacks outside Gardiner, Montana after finishing a three-day hike through Yellowstone National Park. I had wrongly assumed there would be a taxi or shuttle service in Gardiner at the conclusion of our hike.
Fortunately, a guy from Cincinnati stopped and drove us back to our car. He had recognized the Cincinnati Reds jacket my son was wearing and decided he should help.
Perhaps it was that memory that prompted me to pick up this hitchhiker. I slowed and turned our car around and drove past the man with the backpack. We decided he looked safe so we turned around again and picked him up.
Twenty Years On the Road
His name is Tim Shey. He said he has been hitchhiking full time for twenty years. He earns money working side jobs: landscaping, construction, working on farms.
When he is close to running out of money, he buys a loaf of bread and starts looking for work. No peanut butter. Just bread. He said he is sick of peanut butter.
Tim doesn’t have a tent. Just two sleeping bags. He sleeps in places where he won’t be bothered. He said he travels full time so he can share his Christian faith.
I asked him what has changed about hitchhiking in the past twenty years. “For me, nothing,” he said, “but, there are less people doing it.”
“How long does it take to get a ride?” I asked.
“It depends,” he said. “Sometimes five minutes. Sometimes and hour. If no one has stopped in an hour, I start walking.”
He said when you are in your twenties, there is no better way to figure out what you want to do with your life then by hitchhiking across the country. Especially because of the random people you meet, and you see what they are doing for a living and how they like it.
We dropped Tim at the gas station in Tetonia. He planned to stay at the city park and hitchhike to Jackson, Wyoming the next day.
What Has Happened In Twenty Years
Twenty years is a long time to be on the road with a backpack. I am old enough that I can remember some of what happened twenty years ago. Our two sons were young. Our daughter wasn’t born yet. I was just starting my career in investing.
Two decade ago, Tim Duncan, who just announced his retirement, began playing professional basketball with the San Antonio Spurs.
Two decades ago, Satoshi Tajiri created the Pokémon video game for the Nintendo Gameboy in which humans catch and train fictional creatures called pokémon.
Two decades later, humans are running around with their iPhones catching fictional pokémon creatures based on GPS coordinates.
For two decades, my friend Michael has lived in a high security prison in Alabama serving a life without parole sentence.
And for two decades, Tim Shey has crisscrossed the country hitchhiking, mostly sleeping on the ground.
A Manageable Block of Time
We don’t usually contemplate fifty year blocks of time. Or even twenty years for that matter. We don’t remember much of what happened decades ago.
Conversely, most of us do a decent job of looking ahead six months to a year and anticipating what we will be doing.
That is the temporal perspective that seems manageable. The question we have to constantly answer is what choices and decisions will we make over the next year that will impact us twenty or fifty years from now. Decisions about our finances, our priorities, our time. Whether to exercise or wear sunscreen.
Contributing
One of my favorite movies is “Dead Poets Society.” In the film, Robin Williams plays the character of John Keating, a literature teacher at a private boarding school who tries to get his students to broaden their temporal perspective.
He walks them down the school hall and has them look into the faces of former student athletes whose team photographs sit next to school trophies.
Keating says, “They’re not that different from you, are they? Same haircuts. Full of hormones, just like you. Invincible, just like you feel. The world is their oyster. They believe they’re destined for great things, just like many of you. Their eyes are full of hope, just like you. Did they wait until it was too late to make from their lives even one iota of what they were capable? Because, you see gentlemen, these boys are now fertilizing daffodils.”
Later Keating quotes from Walt Whitman’s poem “Oh Me! Oh Life!” in which the poet questions our purpose.
His answer?
“That you are here—that life exists, and identity;
That the powerful play goes on, and you will contribute a verse.”
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