May is derived from Maia, one of the seven Pleiades and a goddess identified with fertility in ancient Rome. With flowers now in full bloom, the etymology is logical. And thankfully, after a long bout with COVID-19, the world is growing again.
Ever since the Great Financial Crisis scorched the economic landscape in 2008, the Federal Reserve has had its watering cans out, providing liquidity to stimulate growth. The result; financial assets have grown like weeds. Politicians have also been acting as fertility gods by dropping cash into peoples’ bank accounts, hoping that fiscal ‘Miracle Grow’ will help Main Street thrive as well.
Financial fertilizer combined with fertile thinking usually leads to bursts of innovation, the winners to be determined. Between 1895-1950, over 1,900 companies produced automobiles in the U.S. But by the time Eisenhower took office, GM, Ford, and Chrysler ruled the roost. Fast forward to 1990. Archie was the first internet search engine. Lycos, AltaVista, and Ask Jeeves soon followed. Today, search is dominated by Google, launched in 1998. Also in the 90s, two ‘telecom companies of the future’, WorldCom and Global Crossing, were busy laying fiberoptic lines across the country and under the seas, creating the backbone of the internet. While the lines are still with us, neither company survived. Finally, remember those must-have flip and candy-bar phones from Motorola and Nokia, or tapping on a PalmPilot or Blackberry? My guess is the mobile device you now carry in your purse or pocket bears that ‘Fruit of Knowledge’ logo. The investment takeaway? It’s usually not the first mouse that gets the cheese.
Even though central banks and politicians have pulled out all the stops with their monetary and fiscal policies, financial rewards are not guaranteed. Today, this government guano is creating manias in several areas. There are currently over 4,000 cryptocurrencies and twenty-nine electric vehicle manufacturers sucking up dollars. Picking the long-term winners is a crapshoot. Concerning new endeavors and hoped-for rewards, I invite you to read this instructive report by Rob Arnott of Research Affiliates (click here, tap download).
The good news? Regardless of financial winners and losers, all this innovation benefits mankind. This year’s success story has been the development, production, and distribution of mRNA vaccines, a wonder to behold. Years ago, Thad Sewick, a dear and long-time client, said to me … “Jim, I know I’m old, but I enjoy hanging around. I can’t wait to see what’s coming around the corner next.” Thad’s fertile mind helped him enjoy 93 years on this good earth.
Happy May. Get out and play.
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Copyright © 2021 - Any opinions are those of James Aldendifer and not necessarily those of RJFS or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. Investing involves risk and you may incur a profit or loss regardless of the strategy selected. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize, or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members.
