Nine Things We Are Thankful For

Tomorrow is Thanksgiving, and on the surface, there is perhaps not a lot to be thankful for. The world is still dealing with the fallout of COVID—and the lockdowns and restrictions designed to slow its spread. Relatedly, supply chain woes linger, fomenting inflation fear. Debates over vaccine mandates, taxes and potential spending legislation add more angst. But finding joy amid trials is the key to getting through this thing called life, so here are some things we think all investors can be grateful for as we gather with family and friends over the year’s greatest feast.

1. The existence of worries like the above. Life is never great. But when bad things—whether real or false—lower investor sentiment, it keeps expectations in check and extends the wall of worry for stocks to climb. If everything looked and felt rosy, it would suggest the bull market’s pinnacle was nearby.

2. Midterm Congressional elections. Regardless of your personal feelings about the current Congress and the administration’s various proposals, stocks like gridlock—and midterms promote that. These contests, now less than a year away, give politicians incentive to avoid rocking the boat, which results in legislation getting watered down or scrapped outright, much as we have seen with the reconciliation budget bill.

3. Creative business owners. While politicians dither and argue about things like the climate and energy supply, creative entrepreneurs are out there doing something about these and other socioeconomic problems. As they do, it creates new investment opportunities for all of us. Here’s to all those pursuing mini-modular nuclear reactors, next-generation plastic recycling, hydrogen power and so very much more

4. The stock market. It is such a wonderful thing! Not only does it let anyone who is willing to take some risk reap the rewards of economic growth and innovation, but it is a very forgiving beast. It doesn’t need perfection to rise, which, thank goodness since perfection never exists. It just needs things to go a tad better than expected. As a bonus, its main job is discounting all widely known information and discerning likely outcomes—in other words, as it pre-prices events, it basically worries about things so that you don’t have to. While many decried things like meme stocks’ advance earlier this year as a sign of excess, we think it should be equally celebrated as some new investors embracing markets—if not moreso.

5. Monetary policymakers. Do they always make wise decisions? Nope. But lately, those at the world’s major central banks are inching away from the long-term bond purchases that have flattened yield curves globally for nearly two years now. The Bank of England, which was among the first to end its quantitative easing program, is now setting expectations that it will begin selling its bond holdings as it raises short-term interest rates, which should promote an even steeper yield curve. These changes may not move the needle economically, but they are injecting some welcome sanity into monetary policy.

6. China’s capital controls. In the long run, markets would probably welcome a more liberalized financial system in China. But while capital controls persist, they help firewall domestic problems, preventing them from infecting global markets to any great extent. Exhibit A: western banks’ exceedingly small exposure to China Evergrande and other distressed property developers. We still don’t think these issues are likely to cause a hard landing or financial crisis in China, but capital controls are something of an insurance policy for Western investors just in case.

7. Rising prices. No, we don’t like paying them. Yes, we realize they can present hardships for people. But they are also signals, telling producers when it is time to increase output—and telling creative people when it is time to dream up new things that will help us all use scarce resources more efficiently. Without price signals, the world would be a much more stagnant, dreary place. Speaking of which …

8. The UK’s electricity price caps. Every now and then, the world needs a reminder that price controls and rationing don’t work. The UK, where several electricity suppliers have gone bust due to rising wholesale prices and capped retail prices, is giving the world this very necessary reminder.

9. Our dear readers. Seriously, y’all are great. Thank you for reading and giving us a reason to write every day. We wish you and yours a very, very happy Thanksgiving.