April 8, 2010
To all the doomsayers: it's time to reevaluate your position. Every time I read the financial press or watch CNBC I hear your screeds of frightful futures (the banking systems bad assets, the government's record borrowing, the next bubble, etc.) and I wonder who would actually take your advice. Your words are a mere echo of what we have been through and contribute little of value on how to prepare for the future. Like with an echo, as time goes on the relevance of your points diminish.
The markets have been ignoring your scare tactics for over a year, and with good reason. Because the world did not end, and we are all a little leaner, quicker and smarter than we were before. That is how intelligent and creative people and companies respond to occasional crisis and investable recessions. Increasingly companies prepare for tough times by reacting quickly and proactively, leaving themselves in a good position to benefit from an eventual recovery. With record speed companies saw danger and took their collective feet off the gas pedal, cutting back capacity utilization, reducing already lean inventories, and questioning orders already booked. They stand ready to ramp up again leaner and when they do they'll be more profitable than ever before. Increasingly companies are looking to other markets to provide growth. Many American companies get over half of their revenues from international markets, i.e. Coca Cola, Caterpillar, Microsoft, Corning, etc. These companies are less dependent on any one market and more interconnected. Along with technological innovation (which has been, currently is and will remain the great American competitive advantage) these companies and many others will go on to do more than they ever have before. For these reasons, one day the markets should reach highs they've never reached before.
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).