Throughout each month, I save a pile of interesting articles as fodder for my next newsletter. Some stories are amusing, at least to me, while others are inspirational or bothersome, striking a nerve so to speak, from which the next Willingdon Views edition emerges. Then there are months like this past one…
The behavior of politicians and the media, from the sex abuse scandals to ridiculing people of faith for turning to prayer after the horrible murders in Texas, is too disgusting to write about.
Even the world of sports, long a reliable source of uplifting stories, is disappointing with the headlines dominated by brawls and political protests.
With less than a month to go before Christmas, I refuse to write a negative newsletter. Admittedly, it has been a bit of a struggle to put pen to paper, but here goes…
The three driving forces behind the strong stock market this year are, for the most part, still in place. Namely: strong earnings growth, low inflation, and low interest rates. As we approach the New Year, we will be constantly testing the sustainability of each of these critical economic factors. Should earnings growth slow, or if inflation and interest rates rise sharply, the stock market could be vulnerable to a correction. In addition, while continued rollback of onerous regulation bodes well for future economic growth and a strong stock market, the absence of meaningful tax reform could disappoint investors. Moreover, from a political perspective, it is becoming more likely that the Republicans will lose the Senate, if not the House, in the 2018 interim elections. With divided government, nothing positive will get done in Washington for the next two years. However, gridlock in government can actually produce a benign, business-friendly environment. In a nutshell, as long as the rules of the game aren’t constantly changing, via political whim or presidential tweet, leading corporations can compete effectively. It might not be pretty, but that’s the nature of the beast.
This past weekend, my wife and I saw a performance of The Sound of Music. There is something about that timeless story that captivates me. Beyond the beautiful music and heart-warming romance, it is a story of principle and the courage of one family to refuse to yield to totalitarianism and state control. As I listened to Captain von Trapp sing Edelweiss, I thought to myself that today we all face a similar challenge not to yield to a long list of appalling behaviors and harmful popular trends. Do we have his courage? I think we do. We just have to demonstrate it more openly, and discuss it more publically.
The highlight of this exceptional show was the singing by the actress who played the Reverend Mother. Her rendition of the song “Climb Every Mountain” brought the house down. I’m hopeful though, that the audience response was due to more than her powerful voice, but also from the inspiration of the words. To climb every mountain, one must look up and focus on the possibilities for improvement, perhaps even dare to strive for greatness. Does this necessary optimism still exist in our country today? I think it does, but it is often overshadowed by the relentless focus, exacerbated by the media, of what is wrong with our country. The realization that we are not perfect, individually or collectively, does not preclude self-examination and a commitment to continual improvement. We should never let what is prevent us from contemplating what could be.
In one month, we will close out a truly amazing year. But to me we are left with one unsettling question – Have we paved the way for a better future, or have we kicked our can of problems down the road for the next generation to deal with? We shall see.
Michael Kayes, CFA