This Could Be BIG Trouble for the Market

Andy Snyder|August 29, 2022

If our answer to the question below proves to be correct… we’re all in big trouble.

The stock market would go haywire. The economy would be torn apart. And America would lose her dominance.

We must pray for a better outcome.

You see, we spent some time on the high seas recently. We were asked to join some of our peers in the publishing industry at a floating financial conference. We toured northern Europe from Lithuania to London… talking money and the world it keeps afloat all along the way.

During a panel discussion, an attendee asked a simple question.

“What’s the biggest threat to the economy today?”

Some of the answers my colleagues offered were simple, predictable even. The Fed… inflation… politics.

But a simple answer usually only masks the right answer.

The simple answer is that Lil’ Johnny has behavioral issues. The correct answer, though, is that Big Johnny is a lousy father who drinks too much.

Like the trapped Fed and runaway inflation, Lil’ Johnny is the result of somebody else’s bad decisions.

Indeed… the problem almost always runs deeper than it first appears.

Forgive Us

We’ve kept our mouth shut on this whole student loan forgiveness charade. Enough ink has been spilled.

You know it… we know it… anybody who isn’t blinded by the bribe knows it.

It’s a dangerous farce that will do no good.

Enough said.

But here’s the thing. It’s what we fear is the gravest threat yet to our once-superior economy.

It’s what happens when the mentality our nation is nurturing creeps its way into the stock market. It already has, for sure. But it will get worse.

It’s a threat to the whole system.

We often write about the slippery slope of bad decisions. It ruins cultures and takes down great nations. Like a star losing its light, it happens so slowly that most never see it.

But what happens when the folks of the “loan forgiveness” generation put hundreds of thousands of dollars into the stock market during a lost decade?

What happens when they sign up for the market’s risk… but then strap on the rusty braces of the government to support them when their burdens become too much to bear?

It’ll be hell.

The stock market will no longer be a thing of efficient price discovery. It’ll be a government-contrived casino where only the prudent lose.

Lawyers Rejoice

We can see it unfolding live if we dare to dig into the number of lawsuits pinning misconduct allegations on the nation’s publicly owned companies.

During the raging bull market that started in March 2020, the number of suits plummeted.

Darren Robbins is a leading litigator in the space. He says the strong market was “the greatest contributor to the decline in filings.”

That makes sense.

But when the market falls, he says, it leads to “an increase in new and creative securities class actions.”

Cases are already on the rise.

But it’s not just the eagerness of investors to sue the companies they own that’s so striking… it’s what they’re suing those companies for – the “creative” side of what Robbins mentions.

“One thing we haven’t seen yet,” says a partner in one leading law firm, “but I expect to see in the future, are securities class actions arising from ESG disclosures.”

For the lucky folks blind to this trend, he’s referring to disclosures related to a company’s “environmental, social and governance” actions.

In other words, this new generation of shareholders will soon be suing because a company isn’t as green as it says it is… or because it’s not as nice to its employees as it reported it was (the pingpong table in the lounge is too small and too old).

Corrupting History

The stock market is the greatest wealth-generating mechanism in human history. No other entity has ever provided such a level and transparent playing field. And yet the idea behind it is at a greater risk today than it was yesterday.

Folks are turning it into a casino. They’re turning it into a political voting machine. And they’re quickly being trained to believe that personal accountability and risk get tossed aside as soon as a president’s approval rating drops and he’s desperate for votes.

It’s trouble.

It’s a grave risk.

This student loan debacle is only one part of the problem – perhaps the simplest of them all.

If the mentality behind it spills into stocks… we’re all in trouble.

But at least we won’t have to pay our bills.