Jumping at Shadows

This time twenty years ago the world was whipping itself into a gale force frenzy. We were gearing up for the new millennium.

The Y2K bug (Year 2000) was looking like a genuine show stopper. The belief was computer programs storing year values as two-digit figures (such as 99) would revert to 00 instead of rolling over to 2000 and therefore cause catastrophic problems.

One of the greatest concerns was airlines and the lack of storage space. In other words, because there was not enough ‘ground’ space to store all the planes in the world, a certain number of planes had to remain in the air.

Therefore, what would happen to those planes in the air when their clocks ticked over into year 2000. Would they literally start falling out of the sky?

Thankfully the Y2K bug died of natural death.

In the last couple of weeks, there have been rising concerns over Donald Trump and what he means for the world economy and more specifically the stock market. There are also concerns about the arrival of Amazon and what that means for Coles (Westfarmers) and Woolworths shareholders, and now this week CBA shareholders have initiated a class action against their own bank.

Personally, I’m not too concerned about any of the above because the minute those worries are quelled, they will only be replaced by something else. It never fails. The wall of worry never sleeps.

What I believe is more important is perspective.

But if you do have any concerns about the above, just consider these events…

A year ago, Brexit frightened the daylights out of people and sent the world into turmoil. A week after it happened, not another word was spoken.

The year before that we had Greece and fears it was about to drop off the face the Earth because its economy was in bad shape, again. No one talks about that now, they’ve moved onto Trump.et.al.

And then we have the threat of Amazon…

Firstly, it will be a long time before Amazon competes in the non-discretionary, consumable market (food) that Woolies and Coles dominate. Not even Aldi and Costco have busted up that duopoly the way many expected.

Amazon will be more of a threat to the discretionary, non-consumable market, such as fashion, accessories, bulk items, etc.

But not everyone shops for price.

Case in point, Commsec. Twenty-two years ago Commsec entered the market as deep discount brokers and the belief was it would send every stock broker out of business. Today there are more stockbrokers than ever before and we’re not even in a boom market.

And then we have Carsales.com. This mob was supposed to tip the car industry on its head and threaten the livelihood of every car dealership in town. Instead, they have given every car yard greater reach and a bigger audience than ever before, and every market participant is better off.

And how about this one. During the nineties with the proliferation of desktop computers in the workplace, the expectation was we would move to a paperless society. Two decades later and we now have a printer in every house.

And remember how computers were going to replace humans and put people out of work? Our employment rates have hardly moved an inch despite catapult like leaps in technology.

Here’s my point. The problem is rarely the problem. The problem is usually the way we see the problem, which is most often clouded by emotion. It’s easy to look for things that are not there.

Or in the words of former Wallaby Coach, Rod Macqueen…

“Things are never as bad as they seem nor are they as good as they seem, instead they’re somewhere in between”.

Have a great weekend!

Adam

P.s. re CBA shareholders instigating a class action against CBA, that would be like suing your parents and expecting a nice inheritance. But we’ll see where it goes.