"I Don't Understand the Stock Market"

August 09, 2021

So say some in my office. Related statements follow: “It’s all paper money.” “I like hard assets.” “It’s gambling.” “I prefer something I can touch.”

I understand the sentiment. The market can feel ethereal and even rigged at times. Invested money can seem like it exists out there somewhere floating in digital la la land compared to the physicality of the soil under your boots on the strip of land you worked hard on or the stream of monthly income coming off the rental property you own.

But here’s the problem with that hypothesis. Many of the products and services of publicly traded companies in investment portfolios are in the real world. You are probably using them today. Like right now.

You might be reading this on a product made by Apple (AAPL) while drinking your Starbucks coffee (SBX). You originally planned to only open one email in your Gmail (GOOG), but one turned into another and eventually you found yourself on our Facebook (FB) page reading this instead of clicking on another cute kitty video cousin Mildred uploaded to YouTube (again GOOG) for the umpteenth time. When you finish reading, you’ll pull up your online banking account at Wells Fargo (WFC) to check your balance before your daily tasks.

Later this morning, you hop in your Ford (F) truck to run some errands. You forgot to fill up the gas tank yesterday, so you head to Chevron (CVX) and shake your head at the price as you swipe your Visa (V) card. You mutter a few savory words under your breath anticipating how much more money you are about to spend on what seems like just a dozen items at Costco (COST).

After shopping you grab a fry and Coke (KO) from McDonald’s (MCD) on the way home. While in the drive thru, your spouse calls via the local Verizon (VZ) cell phone tower to apologetically let you know that they forgot to put Clorox (CLX) bleach on the list. There is no way you’re driving all the way back to stand in those lines, so you make a quick trip to Dollar Tree (DLTR) to pick up a small bottle.

Finally, you get home to a pile of cardboard boxes on the porch filled with products from Amazon (AMZN). Errands are done. Chores await. After lunch you fire up the John Deere (DE) riding lawnmower you bought at Home Depot (HD) last year and spend the rest of the afternoon working outside in the heat.

Goodness that shower feels good, but that doggone Ivory soap bar (PG) can never be used without slipping out of your hands a few times. “Ouch!” Bending hurts to grab it again, but not nearly as painful as those premiums to Anthem (ANTM) every month.

Dinner ends with an inflation-priced steak in your belly, and you head to your favorite chair to watch the game on ESPN (DIS) while the kiddos watch Pokémon on Netflix (NFLX). Eventually eyelids droop, and a headache begins to throb from all the dust and grass you sucked into your lungs that afternoon, so you grab a few Tylenol (JNJ) and head to bed, switching off the lights that were left on in the bedroom all day to the benefit of PG&E (PCG). Finally, you drift off to sleep thinking of that obnoxious dude with a mustache and a Tesla (TSLA) that cut you off during errands today.

Moral of the story: the ups and downs of the stock market can be hard to wrap your head around, but your volatile day today will be filled with the products and services from companies traded on Wall Street. You may not understand the stock market, but the companies sure understand you.