If doomsday isn't around the corner, what's next?
September 24, 2009
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Lately I have been attempting to read as many opinions as possible from well-respected, veteran investors about the current recession as possible. While I always try to keep an open mind and expose myself to lots of different sources of information, including blogs, I value the thoughts of seasoned investors who have been there and done that and get paid to do it now much more than I value the opinion of random, faceless bloggers with trackrecords of months, not years.
I came across another fantastic article about how despite what all of the Chicken Littles out there say the current recession is not the end of the world. And this one is from a familiar voice, The Motley Fool's own Bill Mann. Many CAPS players will be familiar with Bill's work on the Hidden Gems and Global Gains newsletters. He's gone on to work at TMF's new mutual fund, The Independence Fund. There he publishes a monthly letter to investors that's always a great read. The September issue titled, Where's the Kaboom? If doomsday isn't around the corner, what's next? does not disappoint. Here's a great excerpt from it:
..many commentators and investors are still reserving their optimism, even in the face of a rapid rise in share prices and the trickle of good economic news suggesting that a global recovery may be starting. Often meeting the news with outright anger and disbelief, these modern-day Marvin the Martians ("Where's the kaboom? There was supposed to be an Earth-shattering kaboom!") have missed the global asset rally for two reasons. First, huge money isn't made when things go from "pretty good" to "really good." Instead, the biggest stock market gains have historically happened when things could be, in the words of Spınnal Tap's Nigel Tufnel, "none more black," and then improve imperceptibly. In our current situation, the economy's decision to cease collapsing triggered a massive snap-back rally.
The second reason for the backlash is that many people became wedded to their belief that the economy was collapsing and failed to consider that they might be wrong. After all, macroeconomic trends have confounded soothsayers and economists alike for millennia. Put another way, an investing thesis predicated on economic collapse leaves a whole lot of slightly less terrible -- and far more likely -- outcomes on the table...
To think that anyone knows the eventual outcome of our current economic troubles does violence to logic and common sense in equal measure. Of course, the safer position would be to join the folks in the end-of-days crowd. After all, they have most of the evidence on their side, and the events of the past two years have reinforced their position.
There's a lot more to the letter than that, but I highlighted this section because it is in keeping with the theme of my recent posts.
On a related note, I just spoke with my wife on the phone a few minutes ago. She works in HR at a firm in an industry that has been absolutely brutalized. She said that she was absolutely swamped with work. I asked her what she was working on and she replied that she had made several offers to high level candidates for positions that they had applied for at her company...but that many of them had turned them down because they had received better offers elsewhere. Now I realize that this is a very small sample size, but it just struck me as yet another piece of data from the field that the jobs market is improving. If no companies at all were hiring out there then these jobseekers would be grasping for any position that they could get, not getting multiple offers for their services.
Deej
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