Everything is getting better

Everything is getting better and yet it doesn't feel that way. There's a feature/bug in human psychology that causes us to lose perspective almost immediately and judge the present moment -- for lack of a better word -- unfairly. 

The end of the pandemic is going to play out in a very strange way, methinks. And I should explain my view of the current facts: I do think the end is near, at least an end to the pandemic stage of the virus in vaccinated countries. The virus will not be gone; it shouldn't be expected to disappear really. It will be around. But, most people who get the virus will handle it quite well. Individual risk is dropping, and fast. 

And yet, how this plays out among communities and societies could get weird. During the pandemic, we saw this over and over. Some people never left their homes and some did, a lot; some states locked down multiple times and some didn't; some schools closed for a full year and some opened back up. I'm not really interested in declaring a winner between the cautious and the cavalier. As a midwesterner I resist the poles by nature. But I do find it fascinating how, faced with similar circumstances, people responded very differently (and sometimes passionately even dogmatically so). It's like everything today -- fractured media and politics = fractured social responses.  

I think this might continue. I would not be surprised at all if some people continue to wear masks well after herd immunity is achieved. Because the virus will be out there. And others will probably abandon the mask ASAP, and want to bring back the handshake. Will we shake hands? It could get weird. 

Recently I was at a doctor's office and all the doctors and nurses were vaccinated and yet they were masked. It jarred me a little. Will a bell ring when everyone is ok with de-masking? 

And then there are crowds. Workplaces, schools, sporting events, airports. We've always known these are germ factories and we were ok with it. Will we still be ok with it? Or will we be pushed "out of an abundance of caution" to be more selective, more pod-centric, for ... years? 

I'm an optimist so I'll probably lean toward the don't worry / be happy side. And I'll admit it, I'm a little concerned for those who will not be able to accept normalcy. Normal life is full of germs and risks and difficulties. When things get better, we should beware of judging reality by some new standard of no viruses and no crowds and forever masks. This would be rather unfair to ourselves and the world. 

There's a personal finance lesson in here too. I try to remember what I expected at age 20 compared to where I am now. At 20, I was a confident fellow but thought I'd have a middle class financial situation. Life didn't turn out the way I thought it would. I have a great, well paying job and while I would not say I'm financially independent, I'm financially secure. 

In the history of the world of personal finances, I've won. 

I still need to work, save for retirement, raise the kids, etc etc etc. Life is easier but it's not any easier, if you catch my drift. The trick is to remember the reasonable standard. There is no reason to be dissatisfied.

An investing note. As I've been saying to myself over these past several months, I think we need to avoid playing macro economist. We also need to avoid playing stock market pundit. I watch a fair bit of CNBC and the pundits / commentators will frequently talk about playing growth vs. value, industrials vs. staples, and so on. 

For the average investor, this sounds really smart but is very difficult to act on. The practical result of this would be shifting sector by sector indefinitely. Or, investing in every sector all the time -- and at that point one could just buy an index. And I'll note, there's a mindset behind sector rotation that looks at stocks mostly as trading vehicles rather than business investments. 

The bottom line is that whenever you hear about sector rotation or moving into "beaten down" sectors ... just know that this is top down investing. I used to take this approach quite often. It may work for some but never worked for me. What has worked for me is this: sticking with individual companies that are executing well. 

More on this in upcoming posts.