The Most Preposterous Reason to Sell Your Stocks

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Over the last week, I’ve had three investors tell me that they have moved entirely out of equities and into cash – and for the same reason.

Not because the economy is weak. (It isn’t.) Not because stocks are overvalued. (They aren’t.) And not because the Federal Reserve is raising rates. (It has stopped for now.)

No, all three told me they are out of stocks because “The United States is headed for civil war.”

Political polarization is the worst it’s been in my lifetime. (I’ve seen dinner parties come apart at the sound of the T-word.)

Yet “civil war” is the single dumbest reason for cashing out of stocks I’ve ever heard.

These folks didn’t reach this conclusion on their own, of course.

Cable news and social media – always in search of the sensational – are stoking this narrative.

Former U.S. Attorney Joseph diGenova recently proclaimed on Fox News that “Civil discourse in this country for the foreseeable future is over… It’s going to be total war.”

MSNBC commentator Nicolle Wallace played that clip the next day and agreed, saying in her view that President Trump “greenlit a war in this country around race.”

Even Hal, a local friend and Harvard Ph.D., told me over wine the other evening that he expects the country to break apart into red states and blue states.

Trust me. That isn’t going to happen.

When we fought the War Between the States a century and a half ago, it was about serious issues: slavery and disunion.

For comparison purposes, let’s take a look at the state of the nation today:

  • The country is at peace.
  • The economy is growing at 3%, outpacing every other country in the developed world.
  • Consumer spending, which accounts for about two-thirds of economic growth, is robust.
  • The dollar is eight years into a rally that has taken it up nearly 25% in inflation-adjusted terms since its postwar low in 2011.
  • Inflation is MIA.
  • U.S. manufacturing is at record levels.
  • The job market is strong.
  • Energy is cheap.
  • Poverty is down.
  • Wages are up.
  • The gender gap between male and female pay has narrowed. (And most of the remaining difference can be attributed to vocational choice, education, experience and hours worked.)
  • Leisure time is up.
  • Homeownership just hit a five-year high.
  • Unemployment is at a 50-year low.
  • The gap between black and white high school completion rates has almost disappeared.
  • College enrollment has soared.
  • Domestic violence is down.
  • Child abuse is down.
  • Abortion rates are down.
  • We are living longer.
  • Living standards are higher.
  • The air and water are cleaner.
  • Violent crime has plunged.
  • Information and communication are virtually free.
  • And polls show that racist, sexist and homophobic sentiments have never been lower.

Could someone please tell me what the heck Americans are so angry about?

Yes, I know, Donald Trump is a polarizing figure. But he will be gone in two or six years. And our republic will still be standing.

How about the issues?

In January, The Wall Street Journal conducted a poll to determine what people feel should be government leaders’ first priority.

No. 1 was the vanishing middle class.

People don’t seem to realize that the middle class is shrinking because people are moving up. More households than ever are earning more than $100,000 a year.

Yes, the rich are getting richer faster than the rest of us. But, make no mistake, the tide is rising for every quintile.

Not just in terms of income but also in terms of purchasing power.

For example, most Americans today have a smartphone with a feast of standard features, including a watch, stereo, camera, video recorder, voice recorder, GPS, calculator, web browser, health monitor, teleconferencing capability, countless free apps, and a vast library of books, films, music and games.

An $8 million supercomputer from 25 years ago now sits in your pocket and costs less than 200 bucks.

The folks who are so upset about economic inequality seem unaware that capitalism makes it possible for the average citizen to buy the same quality goods and services as the richest individuals.

Is Warren Buffett served a finer filet mignon when he visits a steakhouse?

Does Jeff Bezos communicate on something superior to your iPhone?

Is Oprah Winfrey’s flat-screen Ultra HD TV really better than the one you can get at Walmart for $298?

Does Howard Schultz drink better-quality coffee than the average Starbucks customer?

Gimme a break.

Here’s something else those getting ready for the next civil war might want to consider…

The U.S. currently has a labor shortage. There are more job vacancies than unemployed workers.

That’s going to make it awfully tough to get all those supposedly disgruntled men and women to the ramparts.

Most are too busy working.

Good investing,


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