Life’s but a walking shadow, a poor player
That struts and frets his hour upon the stage
And then is heard no more: it is a tale
Told by an idiot, full of sound and fury,
— Macbeth, Act 5, Scene 5
We can only wonder how Shakespeare’s quill might have recorded the last couple of weeks’ worth of drama in Washington. It’s fair to assume he would have skewered the political players with relentless scorn – all of it deserved.
Perhaps he would have rewritten the famous passage from Macbeth, above. Or perhaps it stands the test of time, unmodified, to perfectly describe the so-called debt ‘crisis’ in America.
Let’s be clear – there was no ‘crisis’ except that created by the politicians. The US has the capacity to pay and the lenders are only too prepared to make the funds available. It’s the equivalent of a billionaire choosing not to pay his credit card bill out of nothing more than spite.
On this page just two weeks ago, I encouraged readers to ignore the political argy bargy in the US, and just focus on investing in great companies at attractive prices.
There’s no way to say ‘I told you so’ without sounding smug, but I’m not looking for credit. It’s the lesson that’s really important. Those who sold in advance of a disaster have been left on the sidelines as markets recovered, just as they were the last time we had a debt ceiling vote, and just as they were when there were ‘fiscal cliff’ worries, Chinese slowdown fears, pre-election jitters and a variety of other potential crises.
As Warren Buffett is wont to remind us, he made his first purchase when the US Dow Jones Industrial Average was 100, and is now around 15,370. There have been myriad reasons why investors might have run for the hills, but the long term result has been nothing short of exceptional.
It really does put the political shenanigans in context as the sideshow they are.
Data, data everywhere
Speaking of putting things in context, many commentators have been hyperventilating about the lack of economic data coming out of the US in the wake of the shutdown. “How are we supposed to know how the economy is tracking” they ask, breathlessly.
It’s a sign of the times, perhaps, that we have become so used to regular data from governments and non-government surveys that some are feeling lost without them. The ‘critical’ US non-farm payroll data wasn’t issued, factory orders went unreported, the retail sales numbers were missing and the trade balance wasn’t published.
It’s enough to make an econocrat curl up in a corner and suck his thumb!
It must have resulted in Wal-Mart shutting its doors and refusing to sell groceries, Google searches being suspended, Amazon.com sales plummeting, General Motors selling fewer cars and iPhone orders screeching to a halt, right?
Of course not. Outside the halls of government and the over-caffeinated trading floors, consumers and businesses just kept on doing what they always do. In fact, as an investor, it was a refreshing change – and it just shows how unimportant most of this hyper-frequent data really is.
Buffett has said he buys “on the assumption that they could close the market the next day and not reopen it for five years”.
That’s 60 monthly jobs numbers, 55 RBA board meetings, 20 quarterly GDP reads and at least one, if not two, Australian Federal elections.
It puts a two-week absence of economic data into the perspective it deserves.
Silence, came the stern reply
Speaking of a lack of information, we’re still waiting to hear from the federal government on our call last week for conflict-free financial advice.
If the number of Facebook shares, Twitter tweets and emailed replies are any indication, this is an issue that Australian investors – very rightly – care about. It’s not good enough that our new federal government is staying silent on the issue.
To be fair, the Australian Financial Review article that prompted our concern didn’t have anyone from the financial services industry – or the federal government – on record as saying the Future of Financial Advice reforms were definitely going to be rolled back, but that’s what the lobbyists are seeking.
So here’s an easy solution. Prime Minister Abbott, Treasurer Hockey and Assistant Treasurer Sinodinos, please support the hundreds of thousands of individual investors across Australia with these seven simple words: “We will not permit conflicted financial advice”.
We’ll keep asking – this is too important to let go. Let’s hope we get some good news soon.
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Scott Phillips owns shares in Amazon.com and Wal-Mart. The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.