Wall Street Is Not Main Street

For as long as I can remember, people have been fixated on the stock market. Is the market up, is it down? Bulls and bears. Your humble scribe made his television debut as a small child on a local TV station where a lady acting as my mom in a grocery store stopped a local news anchor and said I wanted to be just like him, at which point I said something about the Dow Jones Industrial Average being up so many points or something. Alas Hollywood never came calling. Anyway, back then not many people even had stock investments as it was before the rise of the 401k but how the markets were doing was always a segment on the news.

Some of it may just be our love for anything that seems like sports. Is the Dow winning, is the Dow losing? This stock is blowing up, that one is dropping like a rock. Few people really understand “The Market” and even the way we talk about it, unconsciously capitalizing The Market in the way we refer to it as if it is a force of nature. One of the things you quickly learn when you are in the securities business is that The Market is like a casino. Some rare people might buck the odds but for most people the house always wins. Do you think you have some secret insight that is not available to the power brokers in hedge funds and mutual funds? You certainly don’t know more than members of Congress who flaunt their ability to trade on insider knowledge while people like you would go to jail for doing the same.

It has it’s place or it ought to. In a saner world you could invest in a company and share in it’s success. Strong companies had solid returns, nothing crazy of course, just a decent return on your investment. Since the rise of the NASDAQ and “tech stocks” this has turned into rampant speculation with companies not actually making any money and often losing money have astronomical stock prices because they did something that sounded cool or some dimwit on TV like Jim Cramer said to buy a stock (early life check: “Cramer was born in 1955 in Wyndmoor, Pennsylvania (a suburb of Philadelphia), to Jewish parents”).

Back in the day the Dow Jones Industrial Average represented large industrial manufacturing companies as the name would indicate. Today it includes tech stocks like Apple and Cisco, retailers like Home Depot and Walmart and entertainment companies like Disney. At a quick glance, at least half of the 30 companies represented on the DJIA don’t actual make anything. They are just prominent companies with large market capitalizations.

That is all interesting I am sure but so what? The so what is that we are likely heading for a serious and sustained drop in The Market and that will be held up by the Lugenpresse as proof that we should go back to business as usual in America and stop trying to rebuild our industrial base, cease demanding fair trade and spend make-believe government money to prop up the economy.

Treasury Secretary Scott Bessent had this to say recently regarding our entire economic system that is driven by government spending.

“The market and the economy have just become hooked, and we’ve become addicted to this government spending,” Bessent said.

“There’s going to be a detox period.”

Besides the obvious, the problem with government spending is that much of it, to the tune of trillions per year, comes from absolutely imaginary “money” that never has and never will have any connection to reality. The government has money because the government says it has money. That’s it. What is worse is that a lot of consumer spending is also financed by imaginary money in the form of unsecured credit card debt. I have pretty good credit and could easily apply for and be approved for additional credit cards that would give me immediate purchasing power several times my annual income. That makes absolutely no sense but that is how the system thrives, on cheap and imaginary “money” that drives consumer spending.

This is not unique to the U.S., most of the developed nations are deeply mired in debt both government and personal. It is like putting a new coat of paint on a crumbling foundation, thinking that means the house is secure because you can’t see the rot and when it does start to show through, you just slap another coat of paint on top.

Actually fixing the foundation would be expensive and a pain in the ass, but another coat of paint? That’s cheap.

That has been the pattern for decades, the old “kicking the can down the road” scheme.

The markets don’t mind this because they are driven by short term results. Did you make your quarterly estimates? Huzzah! Your stock price goes up! Many businesses are managed on a never ending succession of three month horizons. Cheap debt means people are buying your products, so what if that can’t be sustained indefinitely? That will be a problem for the next CEO to worry about.

That isn’t how you run a business. A business ought to be run with a longer term outlook, making decisions not just for the next quarter but for the next year and the next decade. You have to be profitable of course but not at the expense of sacrificing your future.

After decades of this, we are in a very disjointed situation where the economy can be disastrous for most people but The Market can be doing great. While most of the focus during Pedo Joe Biden’s four year tenure as a placeholder in the Oval Office for Trump was on the raging inflation, if you were invested in The Market it was a pretty good run. On January 20th, 2021 when Joe Biden was sworn in, the S&P 500 closed at 3851. On January 17th, 2025 his last business day in orifice it closed at 5996. That is around a 55% return over four years, not too shabby. The Market had a great four years while the average American very much did not.

The reason this is important to understand is that we are likely headed for a significant “correction” in the market. A “correction” is how money guys describes a drop in the market. The media will spin it as Trump’s fault even though the serious systemic problems underlying the overpriced market and fake economy have been in the works for a long time. Trump is just sort of trying to shore it up. Every other political “leader” in our lifetimes has been content to piss and moan about it in public while doing nothing to address it. I am already seeing the leftist clowns on social media screeching about the stock market losing some value as if that is all that matters. These same people will claim that Republicans are the party of billionaires and big business.

Our economic system has been mutated and mangled over the course of most of last century, it will take a little time and probably a lot of short- and intermediate-term pain. John Wilder proposes we are in a recession already: What Will Come From The Current Recession? and I would agree mostly, as it is very hard to get actual real numbers from our financial system and media.

On the bright side, Trump is just a month into his second term and there won’t be a third so he has some insulation from people screeching about “The Market”. The moves he is making now might not mean eye-popping stock returns in the future but hopefully will mean better times for the average American. The economic system should prioritize the American people and not The Market. Sure it might be more profitable for a company to manufacture cheap widgets in China, ship them to the U.S. and have them sold by low wage retail clerks at Dollar General but that isn’t how a healthy economic system works.

America as a whole was more prosperous, content and free when we made our own stuff, raised our own food and didn’t ship jobs overseas. If we can get closer to that model it might mean lower returns on your stock portfolio but it also should mean a better society for the American people.