The Rise After the Fall

May 16, 2022 by Ted Lamade

Guest post by Ted Lamade, Managing Director at The Carnegie Institution for Science

Two weeks ago, I was scheduled to attend an annual meeting in Chicago. I caught an early morning flight into O’Hare and arrived at my hotel on Michigan Avenue shortly before noon. Knowing I had a few hours to kill before my first meeting, I decided to walk around the city to see how much it had (or had not) emerged from the Covid-19 lockdowns.

As I walked along the city’s Riverwalk, I shielded myself from the wind on a day that was unseasonably cold, even for the spring in The Windy City. Dodging people along Wacker Drive, I noticed a bookstore around the corner from The Wrigley Building. In order to warm up, but also in an effort to embrace Barton Biggs’ bookstore philosophy, I ducked into the store (Biggs’ bookstore philosophy was simply that whenever he traveled to a new city as Morgan Stanley chief investment strategist, he would visit bookstores due to his belief that which books were selling and how they were positioned on the shelves provided a good indicator of a city’s or country’s current mood/sentiment).

While my visit didn’t lead to any earth shattering conclusions regarding the state of the country or economy, I did notice a book incredibly out of place on one of the shelves – a biography of Vince Lombardi. A book about the legendary Green Bay Packers head coach in a Chicago bookstore? A mile from the home of the Monsters of the Midway? It felt like seeing a jelly donut for sale in a Sweetgreen.

As I flipped through the book, there were several quotes strewn throughout. Two jumped out, not because I hadn’t seen them before, but rather because they seemed to be a bit at odds with one another.

“Winning isn’t everything, it’s the only thing.”

And

“The greatest accomplishment in life is not in never falling, but in rising again after you fall.”

I left the bookstore and headed back to my hotel. As I walked towards Michigan Avenue, once again bracing the cold, I began to question my initial impression. Were these two quotes really at odds with one another? Or, were they if fact inseparable?

If Lombardi were alive today, my guess is he would make the case that the former is actually a direct byproduct of the latter — Winning, in the truest sense of the word, results from rising after you fall.

Then it suddenly dawned on me. In the midst of one of the longest bull markets in history, had we somehow forgotten this along the way?

The last decade and a half has been a period characterized by low interest rates, abundant capital, unlimited support from both the Federal Reserve and the U.S. government, and low commodity prices. As a result, nearly every investable asset has appreciated in value.

If so, the logical question is, has this created a generation or two (or even three) of investors with an elevated opinion of their abilities? It would be hard not to.

The fact is, both millennials and the older Gen Z’ers have now spent the bulk of their careers working and investing in a sustained bull market, which has led to an elevated level of confidence. This confidence is arguably even more pronounced for the younger Gen Z’ers who haven’t even entered the workforce. How could it not be when, as the Wall Street Journal pronounced in an article titled What New Grads Want this past weekend,

“This current class is the most in demand group of college graduates to enter the job market in years and they have expectations to match. Grads are seeking more money, flexibility, and specifics about likely assignments than prior classes.”

More money, flexibility, and specifics? I remember just wanting a job that paid enough to cover the rent for my apartment during the financial crisis

So, why does this matter?

To continue reading, please go to the original article here:

https://www.collaborativefund.com/blog/the-rise-after-the-fall/