According to google word usage charts we barely used the word ‘tantrum’ until Edna Mitchell Preston asked four important questions in 1969. What was bothering Lionel the Lion? Why is he hopping around? Why is he roaring and raging and crying? Why is he stomping the ground? 40 pages later and an entire generation of 2-4 year olds could grasp the concept of a tantrum. Talk about nailing your target market, right?
Kate has a two-year-old and suddenly, in the last few weeks, their household has experienced the trauma of a perfect sleeper who no longer desires to close her eyes. Some may call it a tantrum. We’ve all been there as parents. We probably all have been there as 2-4 year olds if we’re being honest. The world is so big, there is so much to see, and Jimmy Fallon has Ed Sheeran as a guest and that’s not until 11:30. C’mon, man!!!!
We know the definition: An uncontrolled outburst of anger and frustration. We know the antics: See Lionel the Lion. We should know the outcome: Kate’s kid still has to go to bed at 8, regardless of who Jimmy Fallon has on as a guest this evening.
We’ve been on a kick in the financial media to use the word tantrum with any market problem that starts with a T. We had the Taper Tantrum of 2013. Now we want to call our current state of affairs in the market the Tariff Tantrum.
Back in 2013 the taper tantrum was in reference to a panic in treasury yields as the Fed announced future tapering of its quantitative easing policy. So many fancy words…we should have just thrown a tantrum because of that. Would the market crumble? Who would buy the bonds? My ‘economics for dummies’ says the prices of bonds would have to fall in response to less demand. Falling prices in bonds means higher yields and so yields shot up. This occurred over a three-month period from May to August of 2013. Oh, by the way, no tapering of Fed bond purchases had even taken place yet. The Fed began this round of tapering in December of 2013. In terms of Kate’s 2 year old’s bed time at 8pm, the tantrum happened at 6:15pm. Lionel the Lion was acting a fool and we didn’t even tell him he had to eat his red oat grass before his second helping of gazelle.
Here we are today with our current Tariff Tantrum. Is it going to be the same story? I don’t know. Can you come up with some plausible, economically sound questions like you could in 2013 on why it’s something to be worried about? Certainly. Does it trivialize real concerns by calling it a tantrum and making it analogous to my friend, Kate, that simply doesn’t know how to parent effectively? Kidding, Kate…and certainly not trying to trivialize real concerns but there is an element of ‘tantrum’ to each of these market selloffs.
Just like a tantrum they are not fun to experience. Just like a tantrum, getting to the root cause can be difficult, and just like a tantrum they can go on longer than you want…or they can be done in an instant because a butterfly caught our eye on the playground. Each one seems a little different, but they all seem to be the same.
Here’s what a child psychologist would tell you to do with a tantrum:
1. Don’t give in. If Kate lets her daughter watch Jimmy Fallon tonight, tomorrow she’ll want to catch the 1am Sportscenter and see if LeBron scored his billionth point in the NBA. JP Morgan is famous for saying ‘In bear markets, stocks return to their rightful owners’. We’re not in a bear market right this second. We might get there, we might not. Be a rightful owner.
2. Don’t invalidate your child’s feelings.I know it’s scary. I know it feels awful to have eclipsed the $800,000 mark in your account and now stare at a number that starts with a 7. I know ice cream in bed at 10:47pm would be amazing. I can’t tell you it wouldn’t.
3. Don’t try to reason with them.Charts and graphs and how many times the market pulls back 10% in a calendar year won’t help you. We can show them to you, and they’re true, but I promise they won’t help the emotions of number 2 from above go away. Kate could enumerate on the health benefits of a 10 hour sleep cycle for brain development. She could show her pictures of beautiful grown women that slept well. It doesn’t matter to the 2 year old.
4. Don’t walk away.If a child is losing their mind, that’s probably the time they need their parents the most. That’s not soft and enabling parenting. I might not say anything at all. I certainly won’t coddle. But I will be there. Our Mancino Utz Group mindset with clients is the same. We’re here. Let’s chat. We’ll sit in the rain with the holes in our umbrella together. That’s what we’re here for.
5. Have a clear plan and don’t lose your cool. If you have kids, you’ll have tantrums. If you have investments that are tied to the unknowable future profits of companies, you’ll have tantrums. In both, it’s good to know what you’ll do inside and outside of the tantrum tornado. The best way to know what you’ll do is by having a plan.
I sent this to Kate for her approval and the only way she’d approve is if I confessed to my own tantrum of this week. It’s Pittsburgh. It’s the last week of March and the first week of April. I’ve thrown three, not one. We don’t have a quarterback for our football team, we need someone to come in at the end of the Pirates game and hold a lead, and my wife told me to cover the three azaleas that I planted for her because it might frost. I planted 7 things, it was 8:30 at night, and it was raining. “Which ones are the azaleas?” may or may not have come across as a tantrum to a bystander.