Are we living in unprecedented times of unsettling uncertainty? How have you been sleeping? How are your nerves? How’s your portfolio? Talked to your broker lately? Are you too busy running for cover to worry about the future?

In times like we’ve been told these are, it’s far too easy to get caught up in the ‘lemming tide’, and allow emotions to rule the day.  And, truth be told, as a member of an industry that is on the front page of multiple publications on a daily basis, and on the tongues of every breathing adult, it would be easy to succumb. There are days when I shake my head after a look at my latest 401k statement, and think it might be time to start investing in a bunker somewhere in Idaho.

However, one small detail seems to get lost in all this: Fear is an emotion. It’s not a reflection of reality, it has no place in financial decision making, but is simply a conditioned response to input. In caveman days, fear was the appropriate response to the toothy feline crouched on your path. With a few minor exceptions, we have evolved. Or at least we like to think we have.

The advertising world knows better. They know there are 2 stimuli that prompt primordial responses in just about everyone: death & sex. Fear of one, and fear of not getting the other, drive most all of the advertising messages in the modern world. If you can get a segment of the populace to believe your product will either stall or promote one of these 2 results, you’ve got a winner.

Since the media, (There’s no point going into the liberal vs. conservative media debate, because they both use this principle to their best advantage) drives the bottom line with advertising revenue, whom do you think has been the beneficiary of the all the negative froth? They haven’t had such a field day with a single topic since the dotbombs. It’s a no-brainer; they get to call it ‘reporting’, but if they can drive readership up with negative press releases and catchy sound bites, their Neilsen numbers bounce, pushing a bump they can sell to advertisers. So long as you’re reading, watching, or listening, they don’t care; it’s all ad revenue to them.

Which brings us to the debate on liberal vs. conservative media- where I would argue there is no such thing. Media is an advertising vehicle, pure and simple. In this day and age, there are essentially no media outlets that aren’t at least partially funded by ad revenue- most of them are closer to 50-75%. Which means demographics, polls, studies, and the like. Just as politics responds to polls, media follows the trends to target audiences. Regardless of the publicized slant of a particular media outlet, they all want your ears and eyes, because that’s what they can sell. The more sensational the story, the more they sell, the better their numbers. It’s a vicious spiral. Dizzy yet?

As financial futures have replaced saber-tooth tigers on the scary scenario spectrum, it has become a simple matter to (cue the ‘Jaws’ theme) offer up real-life anecdotal evidence of impending doom. Never mind that on a percentage basis, most Americans are still well ahead of the knacker man.  

Which means the greatest beneficiary of our current dilemma is the media. They’ve managed to turn a few rustled cattle into a stampede toward the cliff. After the herd launches off the precipice, they’ll be standing by for footage of the carnage, selling tickets to the spectacle and hawking mementos, while they pick through the bones looking for survivors to inteview, and lining up advertisers for the sequel.

 Don’t get me wrong; I know there are financially threatened families, and I realize unemployment is drifting up (although still in the single digits). It’s no secret that the global lending climate has put access to ready credit on the threatened list. That doesn’t mean the world as we know it teeters on the brink of extinction (unless your name is Hugo Chavez). Credit is available, should you be in the mood, and have the bonafides to qualify. Don’t expect your lender to throw money at you with both fists; those days are truly over.

However, with a return to healthy economic fundamentals, we are back where we should be; back where we started, relying on sound financial practices, using the time-honored methods of securing no more credit than we can afford, using no more collateral than we can afford to lose. The pendulum has swung wide to correct, and will eventually return to center.

It will take time to sort our way through the new landscape, but time and again, our country has faced the ‘financial crisis of the decade’, and we’ve always found a way through. Every ‘event’ has been bigger than the last (can you say inflation?), and every time we’ve taken unprecedented measures to right the ship. Every ‘Event’ has been followed by a boom. This will be no different. So, learn the lessons, look for opportunities where you find them, and start writing the stories your grandchildren will beg to hear.

Speculation. It makes the world go ’round. The financial world, in particular. It’s the bedrock of gambling, the essence of markets, and a human trait we just can’t seem to shake. If the possibility of multiple outcomes exists, for any given activity, there will be at least two people willing to stake odds. An industry unto itself, gambling is the life’s blood of many municipalities who rely on the ironically predictable nature of people to take a chance. ‘Win some, lose some’ is the fatalistic mantra of the veteran.

Recent weeks have seen more of the downside of this reality than most are comfortable with. Especially those who had become accustomed to winning. Receiving the latest Mutual Fund statement is a painful reminder that stocks are, in fact,  institutionalized gambling. When it’s your retirement, it really hurts. When it’s your home, well, that’s personal. In reality, it’s called ‘investing’ specifically because there’s ‘Risk’. If there wasn’t risk, it would be a sure thing, and everybody knows there’s no percentage in that. No percentage, no return.

We all have to develop a personal comfort level with risk; Some climb mountains, others daytrade, and still others buy homes. Some do all three. At the moment, mountain climbing is looking pretty tame. But it’s all relative. 2 years ago, no one was willing to admit, or reliably predict, that there was the level of risk built into the system that we have seen revealed in the past months. Surreal as it may seem, 2 years ago, we were riding a wave of unprecedented housing growth. There appeared to be no downside to purchasing a home, using other people’s freely provided money, with none of your own ‘skin’ in the game. And lenders were happy to do it- throwing money at borrowers with both fists. The apparent freedom from risk was a heady, toxic brew, frequently referred to by pundits as ‘hubris’.  As my fishing buddy is fond of saying, “Time wounds all heels”. 

So, here we are. Look anywhere, under any rock, scan any headline- regardless of media- and you’ll find the answer to the deep down questions you’re all wanting to ask, “What happens next?” No, really, the answers are all there. Is today going to be a rally, or a rush day? Will the markets recover? What is going to happen to my house value? And, as realiably as the old ‘Magic 8-ball’, the answers float up off the pages and screens. Depending on your outlook, you will find the answers you seek. Sounds zen, but it’s true.

The reality is, we all know the answers, we just want someone else to validate them. We want to be sure we’re right, because uncertainty is intolerable in today’s environment. The ultimate answer, however, is yes, the world will right itself. How do I know? Because I believe. The answer may be different for you, unfortunately, because you may not believe. In fact if you’re like the average investor at the moment, you’re finding it hard to know what you believe.

So, here’s what I believe, in a nutshell. Are you prepared for some unbelievably insightful answers to life’s current questions? I believe that the markets will be whatever you believe they are. If it’s true for you, it’s true for your world. Because ultimately, the markets, the money, the game, the speculations; they’re all based on what you believe. Not the suits in far-off CorporateVille. You; You decide. The markets are responding right now to your uncertainty.  Fluidly as a mood ring, the markets are turning purple while you ponder your move.

Gambling requires confidence in the cards you’re dealt. Not the cards you wish for, or the ones your neighbor holds, or the ones you had last week; just the ones you have now, in your hands. What’s your Bet?

We just sent out the order for the postcard above, inviting friends and clients to Pickett Street’s First Annual Customer Appreciation Event on Saturday, October 18th. Look for the postcard in your mailboxes within the next week (hopefully!), but until then, please use this post as an excuse to save the date.

We’ll be holding court at Wicked Cellars in North Everett, hosting a tasting of an exclusive collection of wines from Maryhill  Winery, all uniquely paired with handmade truffles from Buchanan Chocolates. Maryhill Winery will be conducting the regular Saturday tasting for Wicked Cellars (which you’re welcome to attend for $5), but will be saving a few exclusive offerings for our event, which will be held in the back room of the wine shop. Buchanan Chocolates will be preparing new truffles specifically for this event, and if initial responses are any indication, at least one of the new flavors is sure to be an instant success!

This event is free to Pickett Street clients and friends. If you don’t get a postcard, please accept our apologies and make plans to join us anyway. If you’ve ever bought or sold a home with us, then you’ve received a box of Buchanan Chocolates, so we encourage you to join us to reacquiant yourself with their products (even if you don’t drink wine ). Click HERE for a Google Map to Wicked Cellars.