Take a deep breath and look at the economy the pandemic left behind. Where are we? Do things look good or bad? Are interest rates high or low? Is growth fast or slow?

As human beings we respond to CHANGE. Extended periods of conditions that once felt good start to get boring and boredom is actually bad. Bored people have time to ponder scenarios that (no coincidence) make the world seem more exciting. What could go wrong? Where are the weakest spots in the big picture?

That’s the Wall of Worry. It’s not always a cycle of good news and bad news, boom and bust. It’s a cycle of comfort. Do we feel bored, suspicious and stagnant, looking for hints of disaster? Or do we feel excited about the future we can build through the challenges?

Right now people are somewhere in the middle. Some feel like they’ve gotten through a savage pandemic / lockdowns / recession / market crash miraculously intact. They don’t believe their luck. They don’t want to go through that again. That’s OK.

Others feel more alive than ever, even invincible. They’ve lived through a historic crash and see that everything short of death is survivable. They know that great risks can carry spectacular rewards . . . that U.S. ingenuity and resilience are remarkable and that we can achieve fantastic results with a little hard work, willpower and yes, luck.

The people who want out talk the market down. The people who want to repeat the thrill talk the market up. Same as ever . . . only accelerated because we’re all talking at each other all the time now.

Total earnings across the S&P 500 . . . the biggest companies that account for about 75% of the wealth in the stock market . . . have climbed 27% from 2019. That’s through all the pandemic disruption.

Take an investor from the end of 2019 who never heard of COVID and bring them forward to today. They’ll marvel at how far stocks have come . . . up 47% end to end . . . but that earnings growth rate helps justify it. High earnings support higher stock prices.

And then that investor will look at interest rates. Low rates support higher earnings multiples . . . stocks can justifiably go higher per $1 in earnings in a low rate world.

So maybe stocks look a little rich and we have a reason to be a little suspicious. But there’s still a lot of disruption left to clean up. A lot of the supply chain problems now aren’t a lack of labor or materials. They’re a lack of logistics . . . labor and materials are getting stuck in a tidal wave of pent-up DEMAND for everything.

People want more cars than the pre-COVID world was equipped to handle. Two years of demand at once. People want more clothes. More computers. More furniture. And it takes human labor at every stage of the process. People don’t scale the way systems do. We’re the weak link.

It takes time to hook everything up again after a catastrophe. Think of this as a big storm, an act of nature (which it is). When a storm comes through, we rebuild and it takes time. We rebuild better, stronger, more flexible.

If current multiples scare you, don’t buy the scary multiples. You don’t have to buy AMZN at 75X next year’s earnings. Nobody is holding your wallet open and pointing to that one stock out of 5,000 stocks.

If the economy scares you, don’t buy weak links. This is often a stealth version of the multiple argument because in a strong economy, strong companies grow fast enough to justify high prices . . . you don’t have to be extremely patient for the “E” in the P/E calculation to get big enough to support the “P.”

If the Fed scares you, don’t buy slow stocks. Companies that can’t grow fast enough to lower their P/E before the Fed lets interest rates rise are not where you want to be. But there are plenty of stocks that are growing at rates that can get ahead of the Fed.

And never forget: the market was worth about 18X earnings before the pandemic, when short-term rates were about 1.5% and long-term rates were around 1.8%. That’s where the Fed could take us in the next 3-6 months.

Bottom line: as long as earnings have what it takes to rise another 8-9% over the next year, the Fed isn’t a problem. But again, this is a pretty big controversy. Follow your gut. You won’t be happy otherwise.

The Fed will let inflation happen. What terrifies them right now is stagnation and unemployment.

Go back to the 1970s for a sense of how this works. Buy in bulk when you can because prices will be higher a year from now.

Use low-rate credit, as ridiculous as it might sound. If you can get things today and pay in dollars that are worth 4-5% less a year from now, do it. Don’t go out of your way to pay big interest rates in the process but for no-interest Buy Now Pay Later . . . do it.

And as people figure that out, companies like AFRM and AFTPY (soon SQ) become more attractive. We were late on AFRM and still up 80% in two months. Yeah, we bought at the end of August, BEFORE that “scary September” rocked the market . . . and we’re still almost a home run in 60 days.

ABNB soaring. COIN. I wish LMND would get moving but you can’t have everything.

As for unemployment, it’s all about matching people to work. States like Nebraska can’t get enough people. Unemployment rate is 2%, almost impossible. NYS and NJ still have a long way to go. 6.3% in NYS feels like mid-2014, ages after the 2008 crash. Needs to get down around 3-4% to feel good again.

States hurting worst are big service industry: CA NV NY. Ask yourself what you want to do with the rest of your life. Where do you want to be? Housing and especially the moving industry are still huge . . . people on the go, start a new life.