The Real Reason I Write
Kyla Scanlon wrote a brief personal statement to convey her broader mission in her recent substack titled What It Means To Explain The Economy. I like Kyla and her approach in achieving her mission; “Through these various platforms, I delve into the delicate and weird and intricate balance of the global system, aiming to demystify complex topics that seem out of reach.” I am by no means in her category of understanding and achievement but it did give me pause as to what on earth I am doing with this newsletter, now that I am four weeks in.
I am not a financial professional and I am not licensed to offer financial advice. All my writings are my own thoughts and perspectives based on how I interpret what I come across in publicly available information about financial markets. Neither what I have written now, nor what I will write in future, are in any shape or form financial advice. This is disclaimer I am applying as a standard in every newsletter.
So now back to how Kyla’s piece got me thinking more about why I write and publish. Writing for me is a critical part of my process in finding clarity as I sift through all my thoughts and emotions that are a reaction to the world around me and the stimuli in the form of what I read, watch, listen to and do. The sensory overwhelm of the world today is not something I need to tell you about. I find that writing helps me reconstruct all the noise (left in my mind as a result of the stimuli) into something coherent. Writing allows me to look for more clarity through that reconstruction process. That covers why I write, but my choice of topics in terms of what to write about is trickier as while my thoughts are a spectrum of many topics, I cannot find a centre if I write about everything.
I chose the economy and financial markets as the topic because it has such far reaching consequences on all of us, yet most choose to ignore getting familiar with them. I can’t remember what lecture I was in, but I liked the lecturer’s logic on one of the indicators he used to measure the complexity of a subject (or topic). He said you could judge how complex a topic is by the number of books that are written to cover the topic. The more books there are, with differing perspectives, the more complex the topic. As an example look at the number of books on Leadership. The economy, in terms of how it works and what is happening during the different cycles, together with financial markets and their cycles fit that category of complexity for me. As complex as it is, I do feel that it does not mean that we should “not bother” with looking into it or trying to understand it. Too many leave it to the professionals and have a laissez faire approach, which is odd considering how consequential it is to our everyday lives.
Part of the reason many don’t even bother to try and follow the markets is probably because financial market participants use so much jargon and intimidating language, so it is important to deconstruct and reconstruct the narrative to make sense of it. I have heard Jason Zweig in different interviews and he touches on this best. While he makes light of it, it is actually quite a serious problem if you think about it;
“Wall Street jargon has a double bad quality. First it obfuscates the situation and confuses you. But secondly it makes you want to pretend you understand it when you don’t” ~ Jason Zweig.
As I reconstruct and learn and publish I have something to go back to as a point of reference.
Looking at what is happening now, and in recent weeks and then contrasting back and reflecting and then projecting forward in terms of what this all means is for me a necessary check in. Writing helps me navigate this choppy sea, where so much happens. I have always found studying history interesting. I also find observing human behaviour fascinating. Financial markets are a reflection of the behaviour of market participants, and that is for me the best form of Reality TV. That there are so many people, looking at so much information, having different objectives and different timeframes to achieve those objectives is what makes the market.
Reading and watching news and financial news (not to mention YouTube and Social Media), without calibrating the messages, that typically are charged, can be debilitating. Writing just helps me zoom out as a habit, and see the forest for the trees. That way I can draw my own conclusions.
If you watched CNBC on the evening (South Africa time evening) of January 14 2023, you would have sensed the sentiment change from a danger is around the corner perspective, to opportunity now being around the corner. The S&P 500 was up just under 3% for that week, and more and more market participants were talking of The Fed pulling off a “Soft Landing”, implying that a recession was no longer a risk highly likely to be realised. Fast forward to Friday October 20 2023, and the sentiment is fast shifting back to danger being around the corner as the S&P 500 fell just over 2% for the week. The obsession with tracking multiple data points makes for an emotional crowd of people. Watchingtheir sentiments change is quite an insightful exercise in observing human behaviour. Not to mention the constant argument as some argue we are in a New Bull Market, while others argue it is a Bull Market within a Bear Market.
Howard Marks, Oaktree Capital’s Co-Chairman published a Memo in December 2022 which opened as follows;
“In my 53 years in the investment world, I’ve seen a number of economic cycles, pendulum swings, manias and panics, bubbles and crashes, but I remember only two real sea changes. I think we may be in the midst of a third one today.”
A sea of change is defined as a radical transformation, rather than what we see as a cyclical change. A radical change of direction in attitude, goals…Something new is on the horizon. Why would I not want to immerse myself in it?