9/14/2018 Weekly Update: Through the Past Darkly

9/14/2018 Weekly Update: Through the Past Darkly

by Zach Marsh on Sep 14, 2018

Weekly Recap

S&P 500                +0.98%

10 Year Treasury   -0.38%

Gold                      -0.19%

Volatility              -19.28%




Weekly Update:  Through the Past Darkly


Last night my eldest son asked me a question:  In sixty years will people look back at today as the era of school shootings?  My initial response was that it is impossible to know how we’ll view today in the rearview mirror of tomorrow.  But it made me think, what strange animals we are.  Our present seems chaotic, our past romantic, and our future vacillates between hope and doom.  I told my son that probably every generation thought the previous generation had it better, and that the present world was in a state of decay or collapse.  By all appearances the past was much simpler, much easier.  Certainly our forefathers and mothers had it much better.  And our current world had devolved into a more violent and inhumane place.  But our reality discredits the myth of nostalgic thinking. 

Looking back over the 20th century, it is easy to gloss over the death, violence and absolute chaos that pervaded the first 50 years.  It is easy to forget that roughly 125 million people died as a result of war or armed conflict from 1900-1950.  The tragedy of the 27 million people who have died in conflict since 1950, when compared to the prior 50 years, takes on new context.  When studying history, one of the things that astonished me was that immediately following the horror of World War 1, the Spanish Flu caused upwards of 100 million deaths within a two year period between 1918-1920.  In total, 1 in 20 people died as a result of the Spanish flu and WWI between 1914-1920.  Imagine what death on that magnitude would be like today?

This is what history teaches us.  History adds context to our present day.  My son, while begging to drop AP European History, says, “I’m never going to need this in my life.”  My answer to him is this:  without it, how can you evaluate the present.  Our hyperbolic media feeds our behavioral tendency to believe the world is falling apart.  But if we take a step back we might see that we actually live at the pinnacle of world advance.  In 2016, in a guest editorial for Wired Magazine, Barack Obama wrote, “We are far better equipped to take on the challenges we face than ever before.  I know that might sound at odds with what we see and hear these days in the cacophony of cable news and social media.  But the next time you’re bombarded with…claims about how our country is doomed…brush off the cynics and fearmongers.  Because the truth is, if you had to choose any time in the course of human history to be alive, you’d choose this one.  Right here in America, right now.”[1]  I don’t believe all that much has really changed in 2 years.

So, what does this means for the markets and your investments?  It means that where we are in the cycle is important only for the near term.  It means that comparisons of investment strategies should not be viewed based upon 6-12 month look-backs, but rather 3-5 year periods at a minimum.  When we analyze the efficacy of an investment strategy we ask ourselves how well this performs on 3 and 5 year rolling monthly return sequence.  Because even the most profitable strategy can underperform during shorter periods, but a durable strategy is one that wins out on longer time horizons.  History and past results, while certainly no guaranteed predictors of the future, are our context for our present day position.          


Thanks for reading,

Zach and Dave

Calibrate Wealth




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[1] Wired Magazine October 12, 2016