Premature Downturn Speculation needs to end

Over the last few days, a number of my friends have been worried about the stock market, worried about a downturn, worried about inflation and more. Fear mongers in the media are fueling the fire with the usual clickbait. Oh, no!

This is not a time to worry. This is a time of celebration. Societies worldwide are opening up. The only thing to worry about right now is worry itself. I’ll get to that part a bit later, but first…

Humanity is in unchartered territory. We just went through a pandemic that killed over 6 MM people and battered the global economy. For the first time in over two years, people are traveling, going to concerts and living a more “normal” life.

However, nothing right now is “normal,” the markets included. Are things going to be a bit awkward and weird for a while? Yes, definitely. Does that mean we are in a downturn? No, absolutely not.

So, what is going on?

As the global economy starts back up, it’s going to be bumpy. Big winners during the pandemic will face some losses around now, like Netflix and Zoom. Big losers during the pandemic will see some upside next quarter, like the whole travel industry.

Why is the market declining?

People are taking money out of the market. There were some reallocations in the beginning of the year. Now, for the first time in 2 years, people can actually have somewhat “normal” plans. It’s pretty obvious that people are pulling money out of the market to plan activities. I certainly am.

What about inflation?

Governments around the world printed a lot of money to combat the effects of the pandemic. Will that lead to some inflation? Yes. Will that lead to a downturn? No. The overall global economy is about to get a massive shot of adrenaline as people start to spend more and more and as local businesses reappear.

What about a downturn?

Businesses worldwide are hiring at record levels to accommodate a return to “normal.” It’s hard to see a downturn coming as everyone returns to work, starts eating out, travels more and goes to events. There are labor shortages everywhere with a lot of money floating around. A real downturn is unlikely.

What can we expect?

There are going to be a couple of rocky quarters as we leave the pandemic in the same way that there were a couple of rocky quarters when we entered the pandemic. The core fundamentals of the global economy are strong. We are entering a period of spending, and that will be good for the global economy and for the markets.

The biggest possible risk is worry itself. Why? Our mindset affects reality. If we think things are going to work out baldly, then they often do. If a lot of people are worrying about a downturn, then a downturn becomes more likely.

So, let's celebrate and focus on the positive. We collectively came together as a global species to fight the pandemic to save the weak, the old and the sick among us. That's amazing.

We have a lot of positive work to do to fix our planet. Tons of innovation is needed, and many multi-billion dollar businesses will be built to create a positive future for humanity. I am excited about this decade, and we are just in the beginning.