By: K(en(neth Louis) G(rant)
Now that the hubbub has died down, it’s time to review the milestone with a more objective eye.
Please know that I have no issue with any of the frenzy. We came by it honestly, and lord knows the wait was long enough. Yes, we violated all prevailing public health protocols, and it must be acknowledged (I fear) that other elements of longstanding decorum were sacrificed as well. I hope everyone got what they needed out of it, and, more importantly, got it out of their systems.
It’s not every day, after all, that we celebrate the quadricentennial of the Mayflower landing at Plymouth Rock, but after the party is over, the time arrives for clear-eyed assessment.
Upon this we can hopefully agree: those four hundred years sure went fast. It doesn’t seem that long ago that the Good Ship (captained by famous forsaken lover Myles Standish) set sail from that Dutch port, pledged to form a new civilization — in the name of God, Country, King and “convenience to the general Good of the Colony”(Mayflower Compact – Plymouth Rock/New World – November 11, 1620), and alit on what is now the unique metropolis of Provincetown, MA.
But the fact is that a great deal of water has flowed, over the last four centuries, under the bridge that brought European settlers to the terra firma of this continent. That some of the streams boded ill there is little cause for debate. Native Americans got a lot of land stole from under them. Buncha them got killed. We created, with decidedly mixed results, the rubric of Social Media. But there were also some heavenly tides. Woodstock, for instance. And the advent of air conditioning.
All of The Good that took a long while to manifest. First, we had to ditch “King”, and replace “Country” with a new one of our own. Wrote ourselves a Constitution. It’s not a perfect document (we have been compelled to amend it 27 times), but undeniably a functional one. Had an Industrial Revolution. Built highways, railroads and airplanes. Landed on moon. Fought (and won) two world wars.
After the second of these quaint skirmishes (WWII), we went on a pretty good run of about seventy-five years. But then came 2020, which caused us to question whether it has all been worth it. My guess is that most would answer in the affirmative (a pox on the 1619 crowd!), but another set of queries ensues: Have we shot out wad? Should we batten down the hatches/re-swab the deck of the old Mayflower and head back to the Netherlands?
Reasonable minds can disagree about this, but the market has certainly rendered a judgment. The Gallant 500, which closed at a proximate record on Friday, was nary a gleam in its forbears’ eyes in 1620, but backward extrapolation (through the confluence of accretion and inflation) would place its value back in them days at a fraction of a penny.
So, anyone who had the foresight to buy and hold — from the point of Mayflower dockage to the present day is looking at, by my rough calculation an aggregate return in excess of 3 Million percent.
Oh ye Ladies and Gentlemen of Foresightful Yore, I salute you.
The biggest question of all (at least insofar as it pertains to the primary matters with which this publication concerns itself) is as follows. Can it go on? Will the long-term investors in the year 2420 look back at this current moment and smile at their having recorded another multi-million percent return?
Sadly, my clairvoyance (to the extent that it resides anywhere outside of my own imagination) does not extend out that far into the future.
But over shorter time horizon, I’m feeling pretty constructive about the forward path for stock valuations.
My reasoning is not terribly nuanced. We got through the election without overmuch fuss (particularly considering what might have transpired) and ended up with a divinely-rendered, split government. Enough of the population was sufficiently motivated to dispatch The Big Orange to have accomplished this objective, but the electorate has wisely withheld bestowing upon them a free hand to do the worst of their bidding.
The economy is showing surprising vigor. I view a big fiscal stimulus to be a lock, perhaps choreographed to be signed by Biden on 1/20/21, in the immediate hours after he pulls his hand away from that bible (unless it happens sooner).
The biggest risk we face, rising in terrifying crescendo, is this blasted virus. And, from that angle, the market view ain’t so pleasing. We all knew that the cold weather would be problematic from this perspective, but the numbers, five full weeks before the official start of winter, are beyond depressing.
Further economic disruption is all but inevitable.
Looks like we’ve done little thus far other than grabbing this big corona cat by the tail.
So, what we gonna do? Print away the problem, of course. The folks in Washington are going to give out money they don’t have, which does not, in fact, exist (at present), and worry about the consequences somewhere down the road (maybe 2420).
I’m not, as a guy with an advanced degree in the dismal science, in a position to endorse the strategy from an economic policy perspective, but am pretty convinced it’s as good way as any to light up the longsuffering (not) investor class. In fact, I’m on the verge of busting out my careworn argument about the scarcity of investible securities (as measured against an increasingly infinite supply of fiat currency, they’re scarce and getting scarcer, so get ‘em while you can).
It’s not gonna be a smooth ride. Latter day market progeny of Captain Standish should anticipate some chop, perhaps rising to a full-on typhoon status by the time as we make our obligatory left turn in the vicinity of Greenland (a locus that has always fascinated and terrified me). This is the coldest spot of our journey, and none should be surprised if it transpires in or around the bitter month of February. By that point, the whole “all ashore that’s going ashore” trope will be rendered moot. Landlubbers like me will have no alternative other than to hang on tight and retch over the rails.
Market participants are currently trying to make sense of it all, and can be forgiven, as illustrated in the following chart, for acting out a bit:
Not gonna lie: this graph unsettles me – in part because I have no idea what it means. By my troth, I can’t even read it properly.
So, all I can rely upon is the Bloomberg annotation at the top. Because when, after all, has a Bloomberg annotation ever been misleading? This annotation informs us that factors have been unusually volatile this year. Should we be concerned about that? Sufficiently so to ask Captain Standish to reverse course?
Well, it’s probably too late for that. And, in general, I would guess that factors will indeed continue to be volatile, may, in fact bounce around like little covid buggers, for as far as I can see over the foggy horizon.
But I do not expect this dynamic to substantially disrupt our progress – at least in the short term – towards that glorious point of disembark — over on the other shore. I am less certain as to whether we reach our final destination, which, by forward extrapolation, would place the 2420 Galant 500 closing price (currently ~3585) to somewhere around 10,755,000,000.
We’re a long way from there, but let’s face it: we’ll all be pretty old by the year MMCDXX.
What’s important is that we take the journey together. You and me.
But first we gotta get through the last VI weeks of MMXX (the CD in the middle will have to wait it’s turn). From a market data perspective, there’s not a lot left on the calendar. The November Jobs Report drops on December 4th. Not many other numbers left to crunch. And before that, we must pass through the portal of Thanksgiving, on a bittersweet (for me) November 26th. To be held without the joyous diversion of watching a helium-filled Snoopy bounding between the buildings that line 6th Avenue.
This Thanksgiving will be a tough one – for me personally (some of you know why) and presumably for most of the rest of you. It’s possible to feel that there is little about which to give thanks this year. But I won’t choose to look at it that way.
I will be giving thanks for you. And all you are and all you do. And for the Mayflower, which kicked off this party in grand style on November 11, 1620. Readers are of course at (sweet) liberty to adopt different viewpoints. And, if they choose, to outfit a modern-day version of a vessel named for the blossoms of the fifth month on the calendar, to set their course towards a return to the Old World.
But when they issue that time-honored, titular command, I’ll be answering with my feet, by going (or, more appropriately, staying) ashore.
With you by my side, I’ll take my chances from there.
TIMSHEL