I wrote this comment to AARP’s “blog” concerning an article they have in their May AARP Bulletin (link not available) titled “Expert Advice for Volatile Times,” an “interview” by Jill Schlesinger of Carrie Schwab-Pomerantz, President of the Charles Schwab Foundation; Melody Hobson, CEO of Ariel Investments; Abby Joseph Cohen, Sr. Investment Strategist Goldman Sachs, Mohamed El-Erian, Chief Economic Advisor Allianz; Diane Swonk, Chief Economist Grant Thornton. You know, experts, 1%ers all.
Their advice? Keep investing in the stock market, buy low, sell high, save more money, you know, pablum of precious little insight or tough advice. So I posted a comment, as AARP doesn’t seem to like people talking to them that much on their website, they must get feedback in some manor but meh.
So I wrote there for lack of a better place. Because it’s true, for example, the auto industry can’t survive on just the cars the 1% will buy, they need more people than that shopping their showrooms.
The article "Expert Advice for Volatile Times" failed to address 2 critical factors for these volatile times. Goldman Sachs Abby Cohen says the US economy was in a stable and steady condition before COVID-19, but she ignores the income inequality that masks the reality for far more Americans than those in Ms. Cohen's or Mr. El-Erian's income bracket. The really wealthy have made tons of money during the past 20 years lets say, while most Americans have not, which is why this pandemic has had such a negative impact on our economy. It's so much easier to crash an economy when most people are NOT benefiting from our "great" economy. Yes, the aggregate is great, but the whole is not healthy.
The 2nd factor is their failure to discuss and explain how the Stock Market is NOT the economy, it is a tool for moving large amounts of capital, it is not products or services or paychecks, and while it is one barometer of the state of the overall economy, and an indicator of the availability of capital for the markets, it is not the economy, it is not what we are or what we do, and people like these extremely wealthy "experts" never seem to mention that part of investing. When the DOW goes up 800 points one day does not mean our economy is all of the sudden better. It means relatively nothing in that regard. Yes, for investing purposes it's important to have capital in the stock market. But it's also important to have health insurance, effective health insurance. It's important to have viable transportation for all Americans, and neither one of those is in evidence even though the capital markets have so much capital that is not working for the betterment of either situation. How to "ride out" this economic crisis should include our Government and our Capital Markets working together to strengthen the country. Sure, that might preclude increasing a dividend that truly benefits the majority stockholders by millions versus me getting $14.10 more every quarter in stock dividends, but that is a really good way we can all ride this out.
The experts gave me their advice: invest in stocks, save more money, sell high and buy low, and I guess trust the Republicans in Congress not to undermine Social Security, Medicare, Medicaid, even though that is what they have been doing since the inception of those programs.
I was pretty disappointed in this article, but knowing the experts in it, not at all surprised.