The Prudent Retiree - June 2021
And the sign said “Long-Haired Freaky People Need Not Apply.””
- “Signs” by Five Man Electrical Band
The sign said that back in 1971. Today, fifty years later, the sign says, “Please, long-haired freaky people apply. We’ll pay you more and give you a bonus.”
How things have changed since the Five Man Electrical Band released their gold record. Employers didn’t want the hippies in 1971. Long hair was frightening. Maybe you were a commie. Today, we’re challenged by a severe labor shortage and employers are crying for workers. Appearance doesn’t matter. Just show up.
The labor shortage is a problem and can be a cause of inflation. There are many reasons people aren’t working—fear of Covid, government benefits that add up to more than their pay, closed schools and lack of childcare. The Fed tells us these are temporary conditions that won’t persist. The inflation is transitory and will abate as the economy reopens. Let’s hope they are right because rising inflation is no friend of stocks.
The 1970s was a time of shortages and stubborn inflation. We lived through a long secular bear market and sky-high interest rates. Conditions didn’t change until the early 1980s. The Fed knows this and will attempt to avoid a repeat. For now, we will give them the benefit of the doubt. Market metrics remain positive, vaccines are proceeding and our reopening economy is experiencing strong demand for pretty much everything. Maintain your current allocations for the moment.
The shortages in labor, commodities like lumber and copper, computer chips for cars and even chicken wings are a sign that change may be at hand. We are monitoring inflation and other potential risk factors. Remember, what matters is how the market responds to events. The market remains in an upward trend. We don’t guess, we listen and act accordingly.
In 1971, the sign said “you’ve got to have a shirt and tie to get a seat.” I’m glad I’m not in the tie business.
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Horseman Group – 3 CityPlace Drive - Suite 290 – St. Louis, MO 63141 – 314.692.7842 – www.horsemangroup.com
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