Anxiety, The Stock Market, and Inflation

As you know from time to time I do finance pieces on my blog. I have been a finance professional for 30 years. Of course I am another person on the web talking about money, so always trust your instincts and do your own research.

The markets are dropping again, Inflation is still high, Ukraine, and politics is ramping up for the midterm elections. It’s an anxiety filled season, oh and are you in Florida? Hurricane Ian created a lot of hardship and stress. So for the finance piece I’m not going to go on a long drawn out post about it. I’m going to give you some bullet points to navigate this, hopefully it helps.

Stock Market: It goes up and it goes down, it is a rollercoaster. The key is, you don’t get off a rollercoaster when its moving, you will get seriously injured or die. Same with the stock market. We are in an unstable period right now, the rollercoaster is moving. If you are in the market you stay, don’t sell. Stocks are fluid, this will level off be patient.

Inflation: Everything is more expensive and is going to remain expensive through AT LEAST the 1st quarter of 2023. So this winter is going to be rough. Energy costs are going to be very high, highest in recent memory is my best guess. You see the Ukraine war, Russia will use energy as leverage. They know Europe needs their gas and oil to heat their homes this winter. Less oil and gas = higher cost for everyone.

Stock pile cash, you’re going to need it.

So how do you deal with this two negative outcomes? YOU STOCKPILE CASH. One less night out this month, make your coffee at home, tighter budget for Halloween… Whatever it is, you need to find money in your personal economy that you can shift. Remember this doesn’t have to be a permanent change, we are weathering a storm, or waiting for the ride to end so to speak. This bad economic time will pass. Believe it or not, I was alive the last time this happened in the 70’s and early 80’s.

Back then, we had so little gas in the U.S. depending on your license plate number you could only get gas on certain days. Now part of me wants to see that again, just to see how the younger generations deal, but I’m going off on a tangent…. Be more frugal NOW in October and pinch as much as you can off your budget and bank it. It’s going to be a long winter, in some places harsh but it will pass. The ride will end and whatever the new normal is we will deal with it.

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Nuclear Anxiety – Mutually assured destruction

So the Ukraine war presses on. Within this tragedy are several new fear propositions that government and media will use to drive clicks. Cynical? Maybe a little but we have to be honest here, media and government parlay fear propositions to drive traffic to the narratives they want to push. It’s been this way for years and every “side” does it. Here is a good example

Now I could have used any number of articles from CNN, FOX really any mainstream media. I chose this one because it’s fairly non legacy media but the headline “the petrifying return of nuclear anxiety” is one of the fear propositions coming from this war. Are they right? To a degree yes, there is nuclear war anxiety. From the article:

The New York Times reported on Tuesday that experts are increasingly concerned that the prospect of strategic defeat might lead Vladimir Putin to order the use of a nuclear weapon. A number of dominos would have to fall before that course would be considered, they caution; still, the chances of confrontation between the world’s largest nuclear powers are higher than at any time in more than thirty years.”

I lived through the 80’s and in the early 80’s the rhetoric coming out of Washington was pretty stern. We had anxiety that there might be a war but as my father accurately pointed out my generation (Gen X) and every generation after will be living under the reality of MAD (Mutually assured destruction). You see if you are under 70 years old, you were born with nuclear weapons pointed towards major populations centers near you.

Enough war already

So anxiety is increasing of the potential of a nuclear war. We can’t dismiss that completely, anytime a nuclear power goes to war there is that possibility. In addition to that at any time a mistake can happen. So how do you deal with this? How do you navigate this new anxiety land mine? You simply have to stop consuming the fear proposition.

The real issue here is, they are right. The risk of a nuclear confrontation is present. It’s always present but the chance it might occur is more likely since Russia has invaded Ukraine. That is our reality. As anxiety sufferers we have to accept this and chose to cope as best we can. Get more sun, sleep more, exercise more, engage in all of the practices you normally do to alieve your stress. I have lived through multiple wars (Vietnam, Panama, Grenada, Yugoslavia, Iraq I, Iraq II, Afghanistan) on and on. Not to mention all the small skirmishes along the way.

The war in Ukraine will end, or rather change to a point where it is less volatile. I don’t know what that looks like, if the Russians occupy, withdraw etc. I do know it is topic #1 right now. Your fear drives views and clicks, legacy media is banking on it. Take care of your mental health and do your best here, things will get better.

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The next fear proposition: Oil

Those in power, all over the world maintain it with different forms of fear. The key component to this power is the notion that they are the only ones who can protect you from the fear. It’s a mutation of the old way fear used to work (and still does in some places) that there was an inferred threat of physical harm. Now that still exists to a degree, you have cancel culture as well which affects the same outcome.

Since we had a steady diet of fear for the last two years in the west, it was clearly highly effective. Most people complied, that’s what people in power want your compliance to ensure their security over power. We saw this after 9/11 as well, we got a whole new government agency “Homeland Security” to deal with that fear proposition, I wonder what agency will be created via the pandemic?

We now have a messy situation in Ukraine, it’s horrible. War sucks, but this is by no means exclusive to Russia. The U.S. has engaged in wars in nearly every decade since WWII. The issue here is Russia supply a huge amount of fossil fuels to the world. There’s the rub, and your new fear proposition. You see oil and gas prices will go up, that affects everything. All those goods you buy are delivered by a vehicle that requires an oil product.

Comply or else

You should start to see $5 for a gallon of gas soon in the U.S. (for my foreign friends that’s very high for us). This war and oil shortage will be the next fear proposition. Watch closely the legacy media and how this is woven into a new narrative. Conservatives will scream about energy independence and how liberals want to crush the economy. Liberals will scream about converting to alternative fuel sources. Both are partially right, and partially wrong.

The issue is, the tone and immediacy that will be presented by each. It will reach a fervor to the point of crisis. How many times did you turn on the news in the last few years and saw “COVID CRISIS”? Its effective, many people succumb to fear propositions. The immediacy of the narrative is the hook, no one is asking “what will this be like in 2025?” you can’t do that because if the threat isn’t imminent it’s not effective to administer control.

Rationing, limits to vehicles I think the sky is the limit here given the absurdity we saw during Covid (this store can open, BUT NOT THAT ONE!!!!!). This will spike your anxiety, cause you to silo people who do not share you view point on the matter and generally continue on the omnipresent cultural “weight” we have had in the west for years now. All sides do this, and for those of us out there in the world trying to make it through another day? Well you are a number, a statistic. Your personal situation isn’t important to those who want power, only your compliance.

This fear cycle is longer than most that I have witnessed. It’s not going to go on forever but those with power have had their “cages rattled” for lack of a better term. Populism, the internet, free enterprise…. They are losing control, and they don’t like it.

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Anxiety and Ukraine: How do you deal with this?

First let me take a moment and say that I hope and wish everyone health and safety in Ukraine. War is horrible and I am so sorry this is happening to you. The rest of the world is watching, there is only so much we can do but we will endeavor to do our best for you.

For those of us not in Ukraine this is yet another event that piles on the anxiety. So what you will see for the next few months is the constant fear proposition, phrases like “World War 3” and “Nuclear Readiness” and “Spiking Oil Prices” will become common place. Why? Why are these phrases being used? To scare you. Fear drives people to seek information, which translates to clicks. Yes, its sinister, this is an opportunity to pull the public back in for more marketing.

Curious as covid lockdowns and mandates wind down a new threat arises. Conspiracy? No I don’t dwell in that head space but I have lived a little bit. This has happened before. You see those who have power want to keep power. I think we can all agree on that, and one of the ways you do that is to make people rely and need you to hold that power. The flaw here is technology. Literally anyone with an IPhone can give you news, they can record it live.

For generations we have had nukes pointed at us.

Media has always been the keeper of knowledge in the modern western world (post WWII). That is now changing, you don’t need traditional media sources to give you information. Take a step back and think about this for just a minute. Most of you have a little box you carry around in your pocket that can get you 95% of all human knowledge, if you have the data/Wi-Fi of course. The media knows this as well, so does government and they hate it.

Just like centuries ago when the keepers of knowledge at the time, religions had cornered the market on knowledge they hated the printing press. Wars happened, it was a bloody mess and then we got the reformation and enlightenment. The liberty movements were born out of this that gave us our modern democratic systems. We are transitioning again, and those who held power don’t want to let it go.

They are trying to scare you, they want you cowed and reliant on them. Yes, Russia has invaded Ukraine and it is horrible. China right now is committing horrific crimes against its Muslim citizens. The U.S. has trillions in debt it can’t pay for. The world has serious social and economic issues. If you absorb it all, it will consume you. You will be broken you will seek refuge in the power of authority. You hope of course is they make things better so you don’t have to be afraid. Sure others get hurt by this (see covid cancellers) but YOU’RE safe.

The problem is, the minute you are safe you don’t need authority anymore and a new fear proposition comes into play. What will it be AFTER Ukraine?

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Finance – 3 tips to deal with this downturn

Inflation is real, gas prices in the U.S. will be 4.00 a gallon soon. Russia has invaded Ukraine; jobless claims rose in January. We are in a down turn period, these happen regularly. Is this a market correction? Partially, meaning a lot of the market has been inflated due to low interest rates so high amounts of capital were parked in stocks as CD rates were so low. The fed hasn’t raised rates enough to pull capital out so a true “correction” isn’t in play IMHO.

Covid shutdowns dramatically impacted the supply chain. On top of that governments subsidized citizens with money so you have the perfect storm of more cash in the economy and less goods. This always equals inflation when this occurs. The question becomes how long does it last? My initial guess was by the end of 2022 things would begin to even out. The mask mandates and locks downs are winding down, even with them in place people got covid. We have a war now, that’s a new circumstance.

I think this will go the same way the Crimea annexation went. A lot of saber rattling, sanctions and the people of Ukraine suffer. Simply put, Ukraine is not part of NATO and beyond the current president’s son’s income, there are no strategic interests of the U.S. at stake. It’s by no means a good situation but the predictions of WW3 and doom I think are very exaggerated (but not impossible). So we have a lot factors in play here, 2022 is going to be a down year economically. As I am writing this I think the market is down approx. 9.5% for the year and we aren’t finished with the 1st qtr. yet.

War sucks

How do you deal with it? I am going to give you 3 quick tips below that will help you navigate this down turn.

  1. Emergency fund: This should normally be 3-6 months of expenses; you now default it to 6. This is to help you weather inflation. If an emergency happens it’s going to cost, you more now than it did in prior years. Beef up your cushion.
  2. Secure your income sources: Down turns affect companies as well and if this extends to long (2 full qtr.’s) many companies will be looking to decrease expenses which usually means layoffs. Now is the time to make yourself as valuable as possible to your current employer. You should additionally be focusing on alternative income sources (side hustles) and if you had an idea now is the time to get it rolling.
  3. Hyper budget: This is a term used to really control spending. When things are good spending isn’t a big deal unless it’s a ridiculous expense. You should really be watching your budget closely and being very precise in your spending habits. This isn’t a long term effort here but for the next qtr. (3 months) really be sensitive to your spending habits and cut back where you can.

This slide will turn around, they always do. It’s not a matter of if it’s a matter of when. The only scenario where this continues to get worse and doesn’t improve is if the war in Ukraine expands. If Russia invades a NATO country, then all bets are off. You’re going to have much larger problems then a 6 month down cycle if that happens. For now, based on my experience I am betting on the side of a quick conflict and occupation and the damage economically to everyone outside of Ukraine subsiding in 6 months max.

That sucks for people in Ukraine, I don’t want this to seem unsympathetic to their plight but this is a finance piece not a political one. The U.S. every 20-30 years engages in a similar war (50’s Korea, 70’ Vietnam, 80’s Panama, 90’s Iraq, 2000 Afghanistan) so you have those historical markers to gauge the financial impact. In all cases markets and economic indicators dipped, commodities increased and the world has economic down turns for 2-6 months before things leveled off. I see that happening here, our economic issues are more than Ukraine. We were due for a correction, right now we are nearly at a -10% market for 2022 I think this trend will continue through the summer.

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