I like to spend time in northern Michigan during the Fourth of July holiday. At every stop along the way, from the local hardware to the stores my wife wanders into, I enjoy making small talk. During the course of the conversations I like to ask the simple question, “How’s business?”
Invariably, the response has been anywhere from swamped to overwhelmed.
In other words, it appears the economy has turned the corner and people
are once again opening their wallets.
That being said, there’s an interesting dichotomy at play. The economy
may be gaining steam, but when you look at the Consumer Confidence
Index, the numbers show there isn’t a whole lot of confidence in the
The CCI now stands near 85. By contrast, it climbed as high as 144.7
during the dot.com boom. So, while the economy may be improving, people
continue to lack confidence that it’s the real deal.
Although things are improving, it’s a far cry from where the economy
stood back in 2009. From an investor’s perspective, the market hit
bottom in March 2009, just over 5 years ago. And though it appears to be
gaining momentum, the pocket book scars from recent years are still
In order to survive, many households had to dip into their cash reserves
and retirement savings just to get by. Even worse, many families lost
their homes and were forced to reboot their entire financial life. For
some, the hit was so severe they still haven’t recovered.
I bring this up because the current bull market is now over five years
old. While a substantial number of households have seen their investment
account values increase dramatically over those years, I suspect that
many have not reaped the financial benefits of this bull market. And,
quite likely, it’s because they just couldn’t afford to participate in
My concern is that many households that have the financial resources
simply choose to sit on the sidelines while the investment world
continues to move ahead. I can certainly understand such fears; after
all, the market plunge was the worst since the Great Depression.
So now, more than five years later, many investors have been rewarded
with incredible growth in their investment accounts, while others sat
idly on the sidelines and saw little or no growth.
They may have had the resources, but they didn’t have the iron stomach I
continually point out that investors need. The bottom line is that they
missed out on the entire journey, and I consider that to be very
Although they are strongly linked, the economy and the stock market do
not necessarily move in tandem. The past five years are a good
illustration. The economy was sluggish, but the market moved up. Some
people invested and profited; some people didn’t have the iron stomach
to invest and lost out.
Today, I believe there’s still a lack of confidence, even as the
investment world continues to flirt with new highs and methodically
surprises more and more people every day.
Nobody knows what the future will bring in the investment world. But I
can say that the last five years have certainly surprised a lot of
people and those that sat on the sidelines missed out on some