Market Overview

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Investment advice from The Great One

If you collect inspirational, empowering quotes, then you’ve already heard this one a million times:

“I skate to where the puck is going to be,” hockey legend Wayne Gretzky once said, “not where it has been.”

The Great Gretzky in 2006. No endorsement is implied. Credit: Kris Krüg]

At the time of this writing, it’s a hundred degrees outside in most cities with a National Hockey League franchise, so let’s think about ice hockey season and apply Gretzky’s aphorism to how we can approach our retirement planning. (Sure, it’s a stretch. Just go with it. It’s hot out.)

The takeaway is this: Change is constant, so forward thinking is necessary when it comes to investing. Embrace the future even when – especially when – it conflicts with the past. History gets a vote, but not a veto.

Out with the old

If we required any hint that there’s a trajectory to investment decision making, we need look no further than the stocks that make up the Dow Jones Industrial Average. Just last month, General Electric – the longest-standing member of the club – was dropped by Dow Jones Indices, which, as a reminder, is an index made up of 30 blue-chip U.S. stocks.

GE was the last remaining original component, dating back to 1896. Nitpickers will point out that GE’s position wasn’t continuous. Over the course of the first decade, it was dropped out of but returned back in to the Dow. And it stuck there from 1907 to 2018.

The original General Electric logo from the 1890s, or a Rorschach test. You decide. (We see a bunny hugging a snake.) Credit: General Electric

If the Dow didn’t adjust to the modern world, then companies such as Distilling and Cattle Feeding Co., Tennessee Coal, Iron and Railroad Co. and U.S. Leather Co. would all still be components. And the index that now stands in the neighborhood of 24,000 would be fairly close to zero.

Adjusting to new technologies was very likely a reason that publisher Charles Dow and statistician Edward Jones included GE at the get-go. This was Thomas Edison’s company, and it was making light fixtures, electric motors and generators at a time when the incandescent light bulb was still a teenager.

In with the new

It would be unfair to GE to say it didn’t keep innovating. Clearly, it did. Today it makes wind turbines, oilfield equipment and quite possibly the engines on the aircraft you most recently flew.

But it has had its challenges and finds itself regrouping after a drastic restructuring of its core businesses. GE has been replaced among the Dow 30 by Walgreens Boots Alliance.

It’s tough to make the case that retail pharmacies represent more forward-thinking technology than electronic manufacturing, but let’s try. Medicine is always advancing and the ability to deliver it directly to consumers is a crucial value-add – especially since our society’s focus has shifted to expediting the delivery of things we want: groceries, clothes, pharmaceuticals. And, while we’re good at delivering the former, most agree we aren’t the greatest at delivering optimal healthcare outcomes.

Although nobody has an answer to how to improve Americans’ health, three of the brightest business minds in the country – Warren Buffett, Jeff Bezos and Jamie Dimon – have formed an alliance to solve the health care mess the best they can, at least for Berkshire Hathaway, Amazon and JP Morgan Chase employees. If this joint venture – which has still not been named – is successful, don’t be surprised if it’s rolled out to the public.

In the meantime, Walgreens is on the rise. If it can’t compete with the triple-teaming, it can always be bought out. Either way, investors win. Of course, technological advancements are unpredictable, as are their commercial repercussions. So you might want to consult a qualified financial advisor to help navigate these uncharted currents.

Shooting for the stars

Someday, though, we might once again have more ambitious technological goals. You’ll correct us if we’re wrong, but there’s hardly a pilot flying today who isn’t a little upset that we haven’t been back to the moon in almost half a century and still haven’t landed on Mars.

President Trump has proposed a “Space Force” as a new military branch. It’s not so far-fetched – China has a branch that focuses on space, cyber and electronic warfare. Russia has a space command that has occasionally been independent but is currently merged with its air force.

Whether or not the U.S. Space Force becomes a reality, the private sector is certainly poised to offer investment opportunities. SpaceX and Virgin Galactic grab the headlines because of their freewheeling CEOs, but there are at least half a dozen companies that could take you beyond the exosphere tomorrow.

And maybe one of them will. Maybe not. Maybe it will be some company still germinating in the dreams of some young engineer with a wild imagination. Change, in investing as in hockey and everywhere else in life, takes a discerning eye to predict.

Edison couldn’t invent every electrical device conceived during the Belle Époque era. George Westinghouse and countless others made contributions every bit as important if not as seminal. As great as Gretzky was, he was succeeded by “Super” Mario Lemieux who was far more productive on a per-game basis – while contending with both mediocre teammates and Hodgkin’s disease. As outsized as The Great One’s goals and assists numbers are, they will someday be surpassed, perhaps by Sid “the Kid” Crosby, perhaps by someone not yet born.

And somewhere, The Great One will be smiling, content to have passed the puck to the next one who can skate to where the puck will be.

“THE EMBLEM OF THE LAND I LOVE …”

The “Great Star” flag flown from 1818-1819, after Indiana, Louisiana, Mississippi, Ohio and Tennessee joined Kentucky, Vermont and the original 13 states.

We hope you had a magnificent Fourth of July, replete with pool parties, cookouts and dazzling fireworks that didn’t separate family members from any portions of their anatomy.

But let’s not forget that this is first and foremost a patriotic holiday, a celebration of America and a commemoration of those who defined what it means to be an American. It’s an occasion to fly our flag high and proud.

It’s a little shocking, though, to find that so many Americans who consider themselves patriots are deeply unaware of the rubrics of respect for our national colors. As a public service, we present this link to USFlag.org’s discussion of the U.S. Flag Code. Do you know how to raise and lower the flag on a staff? When to fly Old Glory higher than other flags in a procession and when to fly it at the same level? How, why and when to retire a flag that is no longer fit for display?

If not, don’t feel bad about it. We’ve seen military veterans, scoutmasters and elected officials get some very basic things wrong – and don’t get us started on clothing designers and car dealers.

It’s worth revisiting the Flag Code periodically. We think you’ll find that every time you read it, you’ll find something you missed.

So we hope you had a great Independence Day, and trust we’ll all be more reverent in our attention to colors in time for Veterans’ Day.