One Optimist’s Changed Perspective
The market just doesn’t seem to have any legs. Despite a sea of bad economic news, there is occasionally some good news about corporate profits that should stimulate buying activity in those stocks. As it turns out, the general mood of the market squelches that possibility.
As someone who had always believed in equities and the resilience of the stock market, there was never any reason to fear investing in stocks over the long term. My perception was that an investor was always rewarded if they had a long term time horizon. Much of that optimism has evaporated in the last year or so as real economic numbers seem to act as a lead boot on the brake pedal of any bullish sentiment.
Corporate Pessimism stalls Recovery
There is today an under-the-radar sentiment among corporations and money managers that the administration is hostile towards big business and other stimulants of economic prosperity. When the employers of millions of Americans are viewed as the enemy, as criminals or assumed to be nothing but opportunists, big business reins in new hiring, investment and research spending.
With real unemployment somewhere around 17% and stock market enthusiasm, analyst pessimism and economist predictions all giving pause, investor confidence and stock market performance are dampened for the long term.
Until a business-friendly environment returns to America, until corporate and individual tax rates are cut or allowed to remain reasonable, and until personal responsibility is endorsed as a preferred money-management philosophy, the stock market will languish.
Stock Market Results look to Government
The election results in November may provide a glimmer of hope, but real change is needed and that change must be away from recent change. Unemployed Americans are not investors. That lost economic stimulus alone is enough to deflate the markets with much less buying and much more mandatory selling. Those baby-boomers who would have continued to save and invest for retirement are instead faced with selling off investments just to survive.
The hope and change that America and the future of the stock market both need right now is a massive real and psychological change towards stimulating job creation, erasing the socialist take-over of private business and returning confidence to everyday Americans who can invest in their IRAs, mutual funds and retirement plans with a feeling of hope and excitement.
An Uncertain Business Climate
Big business today feels nervous and uncertain about the future. Small business see’s rising tax rates, tighter credit and fewer buyers, resulting in lay-offs and suspended expansion plans. It all adds up to the potential for a prolonged bear market with substantial losses in retirement plans and personal investments in the market. This would be the second time in a decade that investors took losses that were not fully returned.
For most of twenty-six years, I told clients that the long-term perspective of the stock market was generally good. We could look at history and find proof of that assumption. But those assumptions depended on democracy, free markets and the will, desire and entrepreneurship of the American people as catalysts for positive progress. Today is quite different.
The Future of the Stock Market; it’s Now or Never
Today, the market is very fickle, weak-in-the-knees and restrained. Money managers and analysts know the environment is different, but few are shouting that belief from the mountain tops. Their firms rely on new investments, so a general consensus that says there is little hope is not good business.
In November of this year, and again in 2012, there are two chances to throw a life preserver to the trillions middle-class people have invested in the markets. It may be too late by 2012 if the markets have not been given some optimism and a healthier environment. The stock market used to be a good bet, but that was based on the assumption that America’s leaders supported business and democracy.
© 2010 K Richard Douglas
