Live Big Digest – Keep Calm and Carry On

Live Big Digest – Keep Calm and Carry On

Keep Calm and Carry OnWe have lately noticed the growing ubiquity of a British government poster produced in 1939 at the beginning of World War II that advises the reader to “Keep Calm and Carry On.” The poster was intended to boost public morale in the face of the many risks of war, including bombardment and even full-blown invasion.  That the image of this poster has resurfaced and spread so widely should probably not surprise us, as so many are still feeling shaken by the economic and financial tumult of the recent past.  In fact, this connection between economic calamity and the  calamities of war seems particularly apt when one considers the potential psychological impact of each.  We all know that exposure to the dangers of war can result in a condition known as Post-traumatic Stress Disorder or PTSD, but upon closer examination the symptoms of this condition seem to mirror the public mood in our post-financial-crisis world.

According to the American Psychiatric Association, the symptoms of PTSD include flashbacks, avoidance of stimuli associated with the trauma, and hypervigilence.  Hypervigilence, in turn, is characterized by increased arousal, a high responsiveness to stimuli, and a constant scanning of the environment for threats.  As we note the rollercoaster ride in the markets over the last 12 months in response to every economic report, it would seem that investors have indeed become highly responsive to stimuli as they continuously scan the environment for threats.

Perhaps to our classification system of Bull Markets and Bear Markets we need to add PTSD Markets.

How else to explain the extraordinary volatility in the face of generally improving economic conditions.  Especially in the U.S., still the world’s largest economy, but even in the Euro-zone, where political leaders continue to lurch toward a long-term solution. Of course, volatility aside, the Dow is currently trading above 13,000, a level not seen since April of 2008, five months before the collapse that cascaded from October of that year to March of 2009. We suppose this is one more manifestation of the old Wall Street saw that “the market climbs a wall of worry.” Of course, the real time for worry will be when those post-trauma blues have finally faded away and we enter the next era of “irrational exuberance.”

Until then, we should surely Keep Calm and Carry On.

Have a great weekend!

The Yeske Buie Team

Dave Yeske