Investment Perspectives: For What It’s Worth

By Bruce Thompson on April 25, 2024

“Something’s happening here, but what it is ain’t exactly clear.” Stephen Stills

Finding perspective wherever one can is an essential part of being an investor, and sometimes it comes from unexpected places.

Following the Oscars each year, I like to log on to You Tube to watch the winning documentary films which, though bite-sized, often contain full-sized ideas. This year, while surfing the site, I got sidetracked with You Tube’s vast collection of music documentaries about the bands many of us grew up listening to.

There are worse ways to get through the often soggy early spring blues! Besides, nothing connects the Head and the Heart like delving into the stories and often hidden meanings behind the songs we danced to, and to which we somehow still know all the words!

Reminiscing on the evolution of modern music since the 1960’s reminded me how, hand in hand with art and fashion, music both reflects and influences social, cultural, and political changes. Music not only connects us to one another, and to our own feelings, but it also offers perspectives on the events, ideas, and challenges of the times.

My first search was for Tracy Chapman, who stole the Grammys this year with the incredibly moving Fast Car duet (click to watch). The song itself is poignant, playing on the American fascination with cars as a symbol of freedom and a pathway to change. But the always classy Chapman unselfishly emerged from private life to perform the song with Luke Combs, who’s cover reached #1 on the country & western billboards. It reminds us that we’ve come a long way, how much road we still have to cover and, above all, of the power of music to bridge differences and bring people together.

Here are brief reviews of two music documentaries I found engaging and offer useful perspectives.

Searching for Sugarman, is a true story about a mysterious folk musician from Motown named Rodriguez, who critics considered an innovator in the early 1970’s, up there with Bob Dylan. But he didn’t achieve commercial success and disappeared from the scene, living out his days in a blighted Detroit neighborhood doing menial labor.

A copy of one of his albums was somehow smuggled into South Africa where, from 1978 to 1998, his records miraculously outsold the Rolling Stones, and people thought he was bigger than Elvis. No one outside of South Africa knew this, including Rodriguez, due to restrictive censorship under Apartheid that cut the country off from the outside world. The people there had no information about him — there were even rumors he had committed suicide, which only added to the mystique — as the lyrics of his songs became rallying cries of the anti-apartheid movement.

I don’t want to give away more of the plot, which peels away several layers of mystery, and follows the efforts of investigative reporters to find him. Suffice it to say, this is an uplifting story about the victory of the human spirit, and what it means to be a true artist.

It also offers timely messages about how difficult getting at the truth can be. Even in the US, where information supposedly flows freely, so does bad and misleading information. This is a topic of vigilance for every investor and an obligation for every citizen.

Echo in the Canyon, narrated by Jakob Dylan (Bob’s son), recounts the miraculous coming together of many of the 1960’s top musicians who lived and created in LA’s Laurel Canyon neighborhood. You can click on the link to read the mind blowing list of musicians. Even more extraordinary is how they collaborated with one another, trading lyrics and ideas for the songs that became anthems of the ‘60’s that we still hum today.

You have to look far back in history to find an explosion of human creativity as significant as what happened with music in the 1960’s, spanning California, Liverpool (The Beatles), London (The Rolling Stones), Detroit (Motown), and New York (Brill Building).

The musicians didn’t grasp the import at the time. To quote Stephen Stills’ song, For What It’s Worth, written for Buffalo Springfield — “Something’s happening here, but what it is ain’t exactly clear.”

That’s a message, heart to head, we can relate to as investors. Nothing is or ever has been clear, leastwise the future.

As we ponder historical stock market charts, which show a generally rising crescendo of prices, we can fall into thinking that yesterday (thanks Beatles) was somehow easier and the backdrop more certain than what we’re experiencing today. Known as Recency Bias, our brains are wired to emphasize recent events and concerns that are fresh in our minds over the significance of older events as they fade from memory.

Fortunately, investors today have the advantage of decades of market experience, evidence, and behavioral research to help us gain perspective.

In the late 1940’s, when Frank Sinatra was crooning away, and jazz was streaming out NYC club doors, the post-war stock rally paused as investors feared that unemployment from the influx of GI’s returning from the war might send us back into depression.

The 1950’s, when BB King, Buddy Holly, and Chuck Berry were cutting a rug, was a golden era for stocks with annual returns of 19%. But the times were hardly carefree with the Korean War, the Soviet launch of Sputnik, the political stain of McCarthyism, and paranoia around the nuclear arms race.

Perhaps we think that the 1960s, marked by the Beatles phenomenon, was all, “Good Day Sunshine.” Yet we may gloss over the existential fears of a nuclear holocaust with missiles pointing at our cities from Cuba, and school kids doing weekly bomb shelter drills, not to mention civil rights and anti-war strife, as captured in CSNY’s song, Ohio. Stocks managed annual returns of 7.7% for the decade, but there were three market corrections of 20% or more.

The Rolling Stones’ Gimme Shelter was a right on in describing the 1970s! The decade was marked by social and political discord as the Vietnam War ground on, Nixon was impeached, unemployment and inflation skyrocketed, and the Arab Oil Embargo had us waiting in line for hours to buy gas. Stocks corrected 48% in ‘73-74, but still returned 6% for the decade.

I could go on, but you get the point. The notion of a carefree investment environment is a unicorn! Yet returns have rewarded patience, time, and diversification.

Yes, I took all that from watching music documentaries on my vacation!

In the words of Neil Young, “Long May You Run”!

Disclosures

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