Does it Really Matter?

by JDH on March 16, 2013

Is this the real life?
Is this just fantasy?
Caught in a landslide
No escape from reality
Open your eyes
Look up to the skies and see
I’m just a poor boy, I need no sympathy
Because I’m easy come, easy go
A little high, little low
Anyway the wind blows, doesn’t really matter to me, to me

Queen, Bohemian Rhapsody, first verse, 1975

Why am I starting off an investment-themed blog quoting a rock song written by a guy who died in 1991?  Because this week I have pondered whether or not the epic events of this week really matter.  Allow me to explain.

I am writing to you today from warm and sunny Las Vegas, where I have spent the week escaping the cold, rain, and snow of southern Ontario.  Apparently I picked a perfect weather week to be here; Las Vegas has experienced record high temperatures for this time of year, but with no humidity the weather is perfect.  I got in three good runs, in shorts, which would have been impossible back home.

We are in Las Vegas for one simple reason: Mrs. JDH likes warm, sunny weather.  So, even though Las Vegas is not the best place to bring two teenage boys on their spring break, we are here anyway.  We rented a house, and the boys have slept in every day, and the internet is fast, so they are happy.  We’ve hit a few all you can eat buffets, since teenage boys like to eat.  We saw Penn & Teller, David Copperfield, and the Criss Angel Believe show, so that got us out of the house.

We have done no gambling whatsoever, so other than our accommodations, meals, and my wife’s clothes shopping trip we have not supported the local economy.  (Actually, my wife’s clothes shopping trip helped the economy quite a bit).

But I digress.  Back to the point about epic events that perhaps don’t really matter.

On Wednesday afternoon, Las Vegas time, son #1 and I killed time while Mrs. JDH was out shopping by watching the new Pope coverage.  We saw thousands of people standing in the rain, and then we saw this shocked old guy in a white outfit stare wide-eyed at the crowd (but he stayed a few feet from the edge of the balcony, presumably afraid he would fall over).

He’s the new Pope, and his election makes sense.  I’m only slightly exaggerating to say that no-one in North America or Europe goes to Catholic church anymore, but in Latin America it’s still a big thing, so if I was running a world-wide business I would want a CEO from my growing markets.  It makes sense.

As an aside, as I go for my runs in the residential areas of Las Vegas, less than 15 minutes south of the Strip, I am amazed at all of the new churches.  They are all protestant denominations, and they are all “new” denominations, no Baptists, Lutherans or Presbyterian to be seen.  I’m exaggerating, as there are Baptist and Catholic churches in Vegas, but more typical names are the International Church, Canyon Ridge Church, Family Worship Church, and other such nebulous, non-denominational brands).  Why so many churches in Las Vegas, aka Sin City?  I have no idea, but the new Pope should take notes and figure it out.

So does the election of a new Pope really matter?  Reading the news reports you would think it does.  He’s described as very humble, because he used to take the bus, and the morning after he got the Big Gig he went and paid his hotel tab.  What a guy.  But does it matter?

I doubt it.  There are probably 1.2 billion people in the world who at some point or another ate at McDonald’s.  Would a new McDonald’s CEO mean anything?  Nope, and despite the non-stop news coverage, I suspect this epic event doesn’t really matter.

But what about the Dow, making another all time high!  That matters, doesn’t it?

Probably not.

It’s not a new high in inflation-adjusted terms, and it’s not a broad-based, inflation adjusted rally.  The retail investor left the part back in 2008, and isn’t back yet.

The economy remains in the doldrums.

This evidence is anecdotal, but across the street from the house I’ve rented for the week in Las Vegas is a house with a foreclosure notice taped to the front door.  Down the street is a five story apartment complex, with perhaps 100 units, that is half built, with building stopped, presumably months ago.  There’s lots of vacant land here, but not a lot of apparent construction activity.

The casino at the Rio was half empty after the Penn & Teller show, although it was packed at the MGM Grand, so there are still tourists spending money here in Vegas.  My point, though, is that we do not appear to be in a booming economy, worthy of record high Dow levels.

There is one person who thinks it matters: Martin Armstrong.  My recollection of his past predictions is that he is not always correct, and sometimes completely wrong, but he is now predicting that the 224 Year Cycle is due to turn March 22nd, 2013 (next Friday). I didn’t spend the $125 to read his thoughts, but apparently bad stuff is going to happen.  Perhaps that will matter.  Or not.

Here’s what I think matters: real life.

Governments continue to print money, so inflation is inevitable.  The economy ain’t great.  Now is a good time to re-assess your needs, and downsize where appropriate.

That’s epic, and that’s what matters.

Thanks for reading, and see you next week (unless Martin Armstrong is correct….)