Fifty-eight years ago this month, (I Can’t Get No) Satisfaction hit the airwaves, quickly becoming the Rolling Stones’ first number-one hit (fun video here). Listeners were hooked by Keith Richards’ buzzy guitar riff and Mick Jagger’s edgy vocals. The song still resonates, because no matter how much we have, there will always be something we don’t have. In fact, Satisfaction is the song that may best represent the American economy. Consumption is ingrained in the American psyche, making up 70% of our gross domestic product. But, as Mr. Jagger laments in the song, getting satisfaction from consumerism is often a mirage. Just take a stroll through the house and check your pulse. And, newsflash … your kids won’t want most of your stuff when you’re gone. Just ask them.
Hip boomers know that there are two sides to every 45 (a seven-inch vinyl record, one song per side, familiar only to this generation). If our economy were a 45, the A-side title would be Consumption, the B-side, Production. But most people are inclined to focus on what they get rather than what they produce. Spending more than we earn over the past several decades has led to massive debts and deficits. Having more debt than GDP is a self-inflicted wound, and perhaps the greatest threat to our long-term economic health. To rebalance our economy, the B-side needs more airplay.
For much of the past decade, short-term interest rates were lying on the floor. With ‘skim-milk’ rates on bank CDs, and ‘2%’ yields on most stocks and bonds, investors and speculators were hungry for anything and everything that might offer price appreciation. Speculating on rising prices, however, is always dicey. Today, short-term rates are a full-fat 5%—much more satisfying. Nevertheless, investing is best viewed as a long-term game, and things have a way of changing. That 5% sounds good and is good … but satisfaction here lasts only as long as the expiration date on the carton.
“Everyone has a plan until they get punched in the mouth.” – Mike Tyson
Goals and plans are easy to have and make. Getting desired results is an altogether different matter. Economies and markets are complex and dynamic systems, with constellations of ever-changing variables. On top of that, the future is unknown and unknowable. And never forget … past performance is no guarantee of future results. For investors, satisfaction in this environment can be hard to get. What to do? Become comfortable with uncertainty. Use history as a guide. Understand current conditions. Have a long-term perspective and place your bets accordingly. Simply humming today’s chart-topper won’t lead to satisfaction down the road.
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.
