The following paragraph is brought to you with faked fear.
“Oh no! The economy is crumbling. Financial ruin is upon us all. The American Dream is dead.”
Okay, that’s enough of that for a while.
Headlines continue to support Stephen Colbert’s “Keep Fear Alive” attitude, but of course, Mr. Colbert was being satirical. While there are headlines about rising corporate profits, purchases, mergers and acquisitions, the news is treated more as a fluke than a trend. The most prominent headlines are reserved for worry and woe, drama and trauma. I hear more about double dip recessions than I do about economic recoveries. Despite the recent market rise, I believe the majority of the investment community continues to live in fear (while receiving very healthy compensation packages).
The saddest part for me is that there is drama and trauma out there, but it is on a personal level. Unemployment is still high. Foreclosures continue. Despite corporate profits, hiring is only sluggishly turning. Housing prices may have bottomed, but many still haven’t sold theirs, or can’t find financing to renovate or buy. I’d like to see more stories about such individuals, not to emphasize woe, but to focus efforts on improving the lives of people rather than institutions.
The good news is that this has happened before. Economies go through cycles, whether that is inherent, or merely a reflection that we are an immature species, economies rise and fall. This drop was significant, but it looks like we are coming out of it. One sign I’ve seen before is that good news is treated as real but with a doubt of its pervasiveness or sustainability. We may have stepped past the worst for another reason. Companies with good earnings are being rewarded with rising stock prices.
In the worst of times, no news is good enough. As things improve, good news becomes increasingly acknowledged, but only marginally at first. At some point a improvement is reflected in an equally large gain. Eventually people get confident and begin anticipating good news and acting on that anticipation. At the peak, giddiness kicks in, fear is forgotten and bad news is ignored, treated as a fluke.
That paragraph can apply to markets, but also relationships, personal projects, plans and dreams.
If we are wise, cycles change us. I think this cycle is changing the world view of many, but not all. A large chunk of the population will breathe a sign of relief and return to their old ways: not worrying about limited resources, debt levels, conspicuous consumption, or the rest of the world. Fortunately, many are breathing a sign of relief for two reasons. They’ve made it through some bad times, and they’ve seen how they lead a better life with some simple changes.
I am hearing more about people getting rid of credit cards, televisions, cars, and McMansions. People are actually walking, bicycling, gardening, socializing, volunteering, and getting by with less. We humans don’t change in unison. Our societies have always shifted in groups and various waves, some advancing, some resisting, some unaware or unconcerned about where everyone else is going. One of the nice things about America is that we can pick our own group, make one up, or head out alone. We can live our lives as we wish, within limits. Fortunately those limits aren’t as limiting here as elsewhere.
Within the world of the stock market, this is earnings season, the time when the data quantifies the speculations. American Superconductor (AMSC) did very well thanks to the interest in alternative energies and increased power efficiencies. Microvision (MVIS) didn’t have the good news that people expected, and a lack of good news was bad for the stock. By the end of the week I’ll know more about Dendreon (DNDN), Gaiam (GAIA), and Real Goods Solar (RSOL). Last quarter’s doubts and uncertainties will be exchanged for modified versions of next quarter’s speculations.
Whether it is the market, the economy, our impact on our environment, or aspects of individuals’ personal lives, the world is dynamic. The stories of today are not static. Change is inevitable. Some things move on the pace of tectonic plates, incredibly slow with abrupt jolts. Most things move more fluidly. I think the tide has already started coming back in. Some boats are lifted. Many are still stuck on the mud. A bit of patience can make a big difference.
Eventually we’ll get back to the point where good news is not a surprise. One thing’s or sure. We’ve earned it.