Money Falling From Heaven

As a financial advisor and a pilot, I consider myself a good risk manager but I can’t hold a candle to my wife. She has given birth to seven children. She told me that if you can survive pregnancy and childbirth, you can do anything. I believe it. With each child I have seen Launa make a conscious decision to put her very life at stake, to create another. She considered the benefits of having another child, weighed it against the physical, emotional and financial risks, and made the decision to move forward.
Our lovely family would not exist without her willingness to risk so much, so that we all could enjoy so much more. Politicians and others today, paralyzed by fear, could learn a lot from mothers like Launa about having the courage to press forward.
America was built on risk taking. King George III offered economic and military “safety” but those early colonists knew better as they weighed the risks against their bold and wonderful desires for freedom.
As we face yet another American crisis, our stomach for risk and our resolve for freedom are being tested. We have sacrificed much in this battle against a frightening enemy. It was good we did because many lives were being lost and something had to be done. As the crisis grew, additional risks appeared. Nations shut down and economies were closed creating the risk of a global economic collapse. Millions of people have lost their source of income and if something doesn’t change, the homelessness, despair and suffering will reach staggering numbers. Many now fear the cure more than the disease.
It may seem trivial to be discussing investing, but successful investing is critical to human survival as well. Some face the reality that if the virus doesn’t kill them, running out of money may. Many are seeking financial safety, but where they are looking may be just as risky, or even more so. As I evaluate the current situation, I am seeing some opportunities, and risks, that investors should be considering. One risk that cannot be ignored as we plan our next steps is inflation.
Politicians are spending unconscionable amounts of money, flooding the economy with dollars (dare I call them counterfeit bills?) that will have long lasting implications. You can’t just dump 4-8 trillion dollars into the economy without devaluing the dollars already there. Those seeking the perceived safety of cash and bonds may be walking into an inflation trap once the economy begins to recover. Real assets such as real estate and stocks have traditionally been a hedge against the erosion of the dollar. I believe a key “risk-managed” decision in this endless money printing environment is to realize that every new stimulus phase increases the risk of a future inflationary storm hitting your savings.
Understand, like the colonist before us, there is no real safe-haven option, so we must choose our destiny and manage the risks. We can do this. After all, about half of us have given birth – so we can do anything.