FYI | Mar 18 2015
By Peter Switzer, Switzer Super Report
I have always hated that silly question that my journo mates inevitably ask of entrepreneurs and CEOs — what keeps you awake at night? Only someone who has not owned and run a successful business would ask a question like that.
If business issues regularly keep you awake at night then you should change businesses or careers. And similarly, wise investing should make sleep easy but I have to confess that when markets look scary or become scary, such as 2007 and 2008 when the GFC hit, I did a lot more watching of late night US business TV than I do nowadays!
That said, I still was not left lying awake worrying.
So, if you are a worrier and like to worry at night to rob yourself of sleep, what should you be worried about? And what should be making you sleep like a baby? (Where did that silly analogy come from, as babies can be shocker sleepers?)
Awake list
My worries list include:
• When will the Fed raise interest rates and how will the market respond? I think they will delay the rise and any sell-off will be a buying opportunity, but it will create some anxiety when it happens.
• Could the rising greenback hit the US economy harder than I think. It’s a guess but because 70% of US growth comes from local consumers, I think the Yanks will do OK.
• Some conflicting economic data in the USA which suggests a softening economy but the job numbers offset these concerns.
• The 60% slide in oil prices and its knock on effects that might surprise me.
• Any new oil price slide and the market reaction, which will create anxiety but I maintain it’s another buying opportunity.
• Question marks over China as economic data tells us it is slowing down. That said, this is an economy that is getting bigger by the day, so even if it grows at 7% instead of 7.5%, its impact on world demand could be bigger because it is a bigger economy.
• Why doesn’t the RBA get the last rate cut over and done with, to let the cut along with the lower dollar help the economy and the stock market? I have to confess it is only a lower order worry, which I usually get out of my system each night on my TV program. Thank God for television!
Sleep list
My get-to-sleep list includes:
• The European QE program has the likes of Wisdom Tree’s Jeremy Scnwartz recommending Europe as the place to invest. When he, and many other experts, want to punt on Europe, it makes me rest easy.
• The 60 billion euros a month bond-buying program of the ECB, with its QE program, buys us a time with low interest rates and this helps stocks.
• The 60% drop in oil prices and the cost-cutting effects as well as the rise in disposable incomes of consumers. Too many analysts ignore this big positive. If oil prices had spiked up 60% I’d be tipping a worldwide recession and a stock market crash!
• Greenback rising worriers have ignored the fact that the dollar has gone up 20% over the year and the S&P 500 is up 11% and US growth is around 3% plus.
• A stronger US dollar helps inflation there and make imports cheaper and anyway a lot US multinationals don’t bring their profits home as they are domiciled in low tax regimes.
• This piece of US history from Larry Kudlow on CNBC: “During the recent dollar decline period, from 2001 to 2011, as the dollar fell 25%, jobs increased a paltry 2.3 million, real GDP growth averaged less than 2%, and the S&P gained a measly 15%.”
• The Fed being slow to raise interest rates and that is partly because the greenback has spiked so hard.
• The low euro and the German stock market at an all-time high and the euro’s impact on German economic activity.
• Vladimir Putin going missing!
• As I pointed out on Saturday, Dr. Doom, Marc Faber, says big cap US stocks look like the smart investment right now!
As you can, see my pro-sleep list outweighs my worry list in number and importance, and it explains why I am sleeping like a parent with grownup kids.
Peter Switzer is the founder and publisher of the Switzer Super Report, a newsletter and website that offers advice, information and education to help you grow your DIY super.
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