Nobody Is Bigger Than The Market

2 brief things this week.

1)  Remember nobody is bigger than the market.

He pulled this from Michael Batnick’s post about how when you were born dominates your investment performance. (Link)

Be humble about what is actually in your control and structure your life as best you can within that understanding. This thing we call the market is a tyrant. Nobody can live outside what it allows for. This is true of all markets. Consider most businesses. A dumb realtor in a bull market vs a smart realtor in the recession. The market is the biggest factor. This gives credence to the strategy of trying to put yourself in front of the wave of a growing industry. I can see you smart people stewarding “run-off” industries solemnly nodding.

How about the labor market? This is bonus season on Wall Street so lots of little violins playing for people who felt they got screwed. But screw you once, shame on them. Screw you twice? Shame on you. If you don’t leave a crappy employer then you have validated your place in the market. Management is not bigger than the market. If they really screwed you, you can appeal to the labor market. Your boss only gets one swing at your pinata. If you let them take more then perhaps you’re at the only party in town.

2) Morgan Housel’s latest about the psychology of the country leading up to the Great Depression is instructive. (Link)

A timeless takeaway:

The problem when studying historical events is that you know how the story ends, and it’s impossible to un-remember what you know today when thinking about the past. It’s hard to imagine alternative paths of history when the actual path is already known. So things always look more inevitable than they were.

The post is worth a full read. Learn how the collective mindset of the country changed in the decade after WWI and the Spanish Flu. American despair gave way to prosperity before lapsing into the worst economic disaster in US history. He relies on newspaper clippings to provide the real-time perspective countering our hindsight view.

Here’s the nuggets that seem to have burrowed into my long-term memory since reading it:

  • The stock market fell 89% from the peak and took 25 years and another world war before it got back to it’s 1929 level. Birth rates fell 17%. Sobering. Especially when you consider what the path of something like that looks like. If you had bought stocks down 80% from the highs, by the time they got to the lows you were down 50% on your money.
  • The 1920s seemed to be the cradle of how American’s think of prosperity even today. I take it for granted when apparently it has roots that are less than 100 years old.

Investing lessons written in blood shouldn’t fade. This post will stay with me.

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