Nine years ago, I got the best advice I ever got, though it took years for it to fully sink in.
“If no one’s got your back, you need to move your back.”
It was during a painfully stressful and humiliating end-of-business-day Thursday ritual I had to go through every week.
I would knock on my boss’s door. I would be invited in. And I would ask, “Should I pack up my things tomorrow?”
The Company Line ‘Til The Bitter End
It was my first office job, and it had been almost a year since I came aboard. I worked with a bunch of fun 20-somethings, and the company line seemed true.
“You can start at the bottom and, if you put in the work, you’ll end up at the top.”
I would be able to build a future there. I could see examples of that all around me, straight to the top of management.
I started that job at the worst possible time. Not long after I started, the company line had a twist added to it as the markets tanked through 2007.
“No matter what we’re keeping everyone on-board. We’ve got a great team and you have too much talent and experience.”
In January 2008, right near the market bottom, my boss walked into the office ashen and grim, told me to leave the room, and proceeded to can the other five people.
The company had maintained the company line right until the bitter end. Everyone in that room, including my immediate boss, believed it.
A lot of the upwardly mobile people I knew, great people and workers, were gone within months as well.
Whether through wishful thinking or willful manipulation, upper management stuck to it to make sure everyone was working to meet the company’s goals, and not in their personal interests, right up until the bitter end.
I wasn’t off the chopping block, though. Another part of the company I worked with said they wanted to keep me on, and they’d finalize the transfer as soon as possible.
One week became two, became three, became four. Each Thursday, I checked in to see if the next day was my last. I finally asked if it would ever happen, after being told that I had at least one more week for the fourth time.
My boss, a good and honest man in every regard, sighed and said, “Well I can’t keep you on here much longer and they don’t seem to be doing anything. If no one’s got your back, you need to move your back.”
Getting To The Point
We just got through a week of unfathomable volatility. Since the beginning of last week, we’ve witnessed the biggest intraday move ever, and the Dow has moved in value about as much as its current value — about 24,500 — wiping out trillions of dollars.
The Fed deserves the lion’s share of the blame.
It has to pursue at least three more interest rate hikes this year. It can’t not do that, with everything from inflation indicators to bond yields and employment and wage data flashing red.
But that will deflate equities. And bond prices will drop as yields go up, right as liquidity drops in the bond market because the giant government purchases will stop.
There is no version of this that works without tossing some people under the bus. So we keep being fed the market’s versions of company lines.
Talking heads say that the bull market is intact. They need you to stay in equities as their clients and institutional investors sell first at higher prices.
The New York Fed President, William Dudley, said that the correction was “small potatoes.”
Never mind the fact that it wiped out trillions of dollars, blew out people’s stop losses, and underlined the structural flaws in the artificially-inflated market the Fed created with a nearly decade-long $4 trillion QE program.
The Fed needs us to keep our money in the game while it pulls the rug out from under us to unwind its grand experiment.
My point is, we are being fed the market’s version of company lines to make sure, whether through wishful thinking or willful manipulation, we act in its best interests and not ours.
The Moral Of The Story
So what’s the end of my story?
The fifth week I planned on walking into his office on Thursday to say I wouldn’t be back. The word came that the transfer went through on Wednesday.
My ordeal was far from over. Over five years I was canned three times by the same company. I worked my way up in experience and job titles, but with virtually no extra pay, and clearly none of the job security promised with each new job.
The third time was the charm. I finally learned my lesson and turned down another transfer. I’ve found a place where people truly had my back, and I’ve been here ever since.
The question remains, how will your story end?
If you let them, the Fed and institutional investors will keep feeding you the same lines to keep you in line.
They’ll do it time and time again as long as it works. They’ll use you for their agenda and for their profit. Eventually, when you have nothing left of value to them, you’ll be left out in the cold.
This last week was a reminder that the economy and the markets are not built for us. They are built for them.
This last week was a reminder that when no one has your back, it is time to move your back.
A great option is gold, and the reason why can be summed up in one chart:
This will happen time and time again for months or years to come, until a slew of underlying market issues are resolved.
Take this lesson to heart and add a hedge your portfolio. Move into positions that aren’t buckling under the pressure of high valuations, weak earnings, and close to a decade of flawed monetary policy.
Gold and gold miners offer both fantastic upward potential and downside protection. Move your back.
