When Less is More and More is Less, Except When……..

Danielle Fellage |

When Less is More and More is Less, Except When……..

Jay Gershman – May 2021


I have been trying to find the right message to address the questions and comments that our firm is hearing quite often these days. I hope that my thoughts, regardless of your level of wealth, or political views helps you understand the current investment climate.

Asumption: Let`s begin with the elephant in the room, the stock market is disappointing recently due to actions of Democrats and President Joe Biden.

Response: Last years returns were so optimistic of what would happen this year that it left no room for less than perfect. However, the S&P 500-year return to date is very good and while the markets have been cycling lately for the most part only high flying stocks have seen their price drops.

Another assumption is that Inflation seems to be very high, and the government is spending too much.

Response:  Inflation by definition is too much money chasing too few goods or services. The government has continued the stimulative policies started by Trump’s administration, but production of goods has been disrupted by pandemic shutdowns, employees unable to work. Recently, supply chain disruptions, many occurring in overseas countries, have been due to  whose vaccination programs have been much slower than here in the US. Eventually things should get better, with product backlogs reducing, leading eventually to lower prices.

Assumption: The government is paying people not to work and that is why there is high unemployment and companies cannot find qualified workers.

Response: The reality is that the Federal government is paying an additional stipend, but recent statistics showed that 1.2 million experienced workers retired unexpectedly last year due to COVID-19. That is a lot of knowledge and experience that will take time to replace.

Lastly, there is the assumption that the higher tax proposals of this administration will cause the stock market to correct.

Response:  There has been many proposals regarding infrastructure, education, healthcare, and taxes. With a very evenly split Senate, most proposals are unlikely to be more than just negotiation tactics. In the end, bills will be passed but likely watered down. For the record, past capital gains tax increases have not been a precursor or predictor of market corrections.

In summary, I chose the title to remind people that the markets generally look forward 12-18 months, fear prosperity, inflation and higher interest rates and like conditions were companies are profitable but things are not so great for employees and the economy. In other words, less is good for market returns. Currently, it appears we are in a “more is less” situation. The economy is roaring, prices are rising due to supply disruptions and people flush with cash. However, the excess stimulus eventually will end, taxes will absorb some of the excess and what will remain constant is a demographic were the largest age block, the baby boomers are getting older and not in their prime spending years. Therefore inflation and higher interest rates may not be in the cards longterm.

Lastly and most important, anytime you find yourself trying to look back to history as a guide to the past because you think that will help you understand what’s coming next; stop yourself and repeat the following, “Except this time, the Federal reserve is keeping rates artificially low, the government is providing an artificial stimulus and there is so much disruptive technology being introduced that will make us increasingly productive”! In other words, no one has any idea what is going to happen to the economy or stock markets. Stop blaming one political party based on what is happening today and remember the long run is not what happening today or your last investment statement.


Enjoy your new re-found freedom. Focus on hugging your friends and family and how to spend your money to find lifetime fulfilllment.