While it is true that I took a more optimistic tone in my New Year’s quarterly commentary, I believe it is also necessary to clarify my science and discipline when discussing that “optimism.” My process tells me that everything in life is predicated upon choices, alternatives, and that gauging risk (the probability of certain outcomes) is part of making decisions. In that sense, one might either be bullish or bearish.
Of course, there are no
absolutes in life, either. Therefore, we
are always on a sliding scale, measuring equivalencies and gauging our
relationship to those possible outcomes.
As a result, there are also subjective responses to objective information.
Am I bullish or bearish in
2013? Let’s say, simply, that the
trajectory of the data has manifestly changed resulting in a subtle shift in
possible outcomes. On a scale of
alternative probabilities, modest growth is more likely than continued
deterioration.
If this sounds equivocal, I’d
rather that than to be locked into a misstatement about the nuance of the
market’s delicate psyche.
What percentage?
Still, some of the game
changing data has clearly shifted in our favor.
For the first time in half-a-decade, consumer debt has diminished as a
percentage of take home pay, allowing us the liberty to predict, if not a
spending frenzy, then a savings modality that is good for future business. The
The rest of the world is
having a tough time of it. The impact of
European union is settling in, not just culturally, but financially, as
well. It’s no coincidence that as European
banks and trade associations focus upon their most dire of members, currency
and focus is diverted from the financial marketplace. The proliferation of these debt and spending
issues creates a vacuum that must be filled by other nations. Physics tells us so.
The migration of capital
always flows towards the most efficient result.
That is why we see the rise and fall of geographies, sectors, nations
and equities. In the 1980’s no one was
predicting the death knell of Japan
Demographics.
Much of what we can predict
today derives not from politics or region, but from demographics. Things, and
people, are getting older. Bridges,
roads, electric grids, farmlands, schools, computer software, and our bodies
are battling the degradation of time. How
we grow old, is not only a moral and spiritual dilemma, but also a
capitalist paradigm.
Productivity is measured by a
new normal. The recession has taught us
this. But we also must deal with the
ethics, politics, and morality of how resources are deployed to deal with the
demography of our time.
If investors raise their heads
up from the depression they’ve been in, they might see a landscape, evolving
such as it is, that is rife with capital and moral opportunity.
As paradigms go, that is my
mild endorsement for investing versus inertia.
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