Morty Confronts the Wall of Worry

He wishes stocks saw the world the way he does.

Predawn at Kyoto’s Fushimi Inari shrine found me training alongside Morty Pessiman, famed for his supremely dry martinis, and legal wunderkind Ren Sasaki, who can resolve cross-border disputes faster than you can say ‘arbitration.’

Not far past the grand torii gate entrance on our way to the mountain path, Morty was already beside himself. Another Gallup poll confirmed something that’s bugged him since the subprime mortgage crash: Americans are unhappy, but stocks keep rising.

“Wall-to-wall worrywarts and/or aspiring terrorists,” he huffed, leaping up the stone steps. He was talking about young people, the terrorist bit in reference to pro-Palestinian protesters on American campuses. “Progress solved most of their worries, so they conjured up new ones.” Huff, huff. He called it “customary” for young generations to feel occasionally confused, “but,” he said before a dramatic inhale, “at least we understood whether we were male or female.”

I raised my hand. “Male.” Ren gave a thumbs-up. “Same.”

Morty offered a litany of shortcomings among today’s youth, including “debt up to their eyeballs, asking for bailouts,” but the real source of his consternation came at the end, as we reached the iconic twin tunnels of vermillion: “But there it is, a rising S&P 500. Come what damn may.”

What irks him is not so much that everyone’s down in the dumps, but that stocks couldn’t care less, and he’s been underinvested since the tail end of Bush the Younger, which was a terrible moment for dialing down stock allocation. Near perfectly wrong, in fact, but dial down he did. No matter how many times I spell it out for him, he will never absorb that the best times to buy or hold coincide with the worst times in news. He consumes more news in a day than I see in a month — and I’m trying to cut back.

When it comes to Gallup’s results, though, and perhaps because of his insatiable appetite for a daily drench of disaster, he’s right.

On the off chance you don’t follow polls as closely as Morty does, I’ll fill in the background.

Megan Brenan reported at Gallup in February that, for only the third time in more than two decades, less than half of Americans said they were “very satisfied” with the way things were going in their personal lives. “The 47% of US adults expressing high satisfaction with their lives has edged down three percentage points over the past year and is only one point higher than the 2011 record low for the trend,” she wrote on the polling company’s news site. “This lower satisfaction level coincides with weak economic confidence.”

Ol’ Morty says pessimism is to the economy what frost is to flowers. Then he extends it: Economic weakness can’t be good for companies questing for profit, therefore an unhappy public must be a harbinger of weak earnings on the way, thus lower stock prices.

He’s wrong, and successful investing requires understanding why, so let’s dive in and understand it.