Whereas the "micro" details of ascribing corporate valuations are litigated every day through securities' trading on global bourses, there is very little "macro" disagreement that we are at a critical global inflection where recovery and purchasing power either expand or remain less than satisfactory. If it doesn't happen now, after all the intervention, debate, austerity and fiscal changes, it is not likely to take root at all.
The
future of economic momentum now lies
with decisions that were made during the previous half-decade, and are being
made today on continents East to West.
Both public and private institutions have applied their best minds to
the task of remediating a systemic cancer that sucked all the energy out of a
generation-long economic bull that came crashing down because of over-leverage,
greed, and mismanagement. No crashes are
"good", but if it hadn't happened, the stability and viability of
continued gains would have been tenuous, at best.
A
key to reviving the financial markets
and more consistent global economic output would be to rebuild the conditions
that allow for confidence in our institutions and an equitable playing field
for all participants. Not a "redistribution of wealth"
for everyone, but simply the opportunity for anyone to succeed who puts forth
the effort.
At
all costs, the challenge is to continue the flow of capital into
entrepreneurship and problem-solving for the good of the populace. No one turns their back... or capital... on a
"better mousetrap."
Based
upon actions taken thus far, the jury is still out as to whether we are simply
in a trader's/speculator's haven or a tectonic shift towards social/moral/demographic
reflection.
It's
in the dirt
Although
several sectors are showing significant price recovery (Financials,
Industrials, Cyclicals), my work indicates that price appreciation alone is not
sufficient to divert from the greater goal of creating top line revenue
expansion through innovation and product development. Part of this derives from the public's
preoccupation with short-term balance sheet analysis and a proliferation of 24
hour business news programming. The
intensity and foresight necessary actually to build something is being held
hostage to headlines and daily upticks in securities trading. Political and social reforms need to be more
robust in addressing systemic issues that cause breakdowns in repeatable sales
and profitability. Last week's market
activity may have touched "new highs", but, in reality, all we really
did was stir up a lot of froth at the top with no significant momentum shifts.
Some
might say that economic reforms should be tax and government related, while
others look at the private sector as the
nexus of possible solutions. As an
analyst, I am agnostic about the source
of a solution, or set of solutions. But
what I can respond to is the diminution in probabilities I see daily in my
analytics that leads me to believe that the traditional parabolic ebb and flow
of business is slowly being replaced by a linear boom/bust pattern that doesn't
bode well for a new generation of investors who want to benefit not only from
stock speculation, but a secular (generational) opportunity to make money,
contribute, and create new ideas and social reform.
Crossroad
More
and more of our younger citizens are
becoming frustrated by their elder's greed and ignorance. The wrenching impact of economic and social
recession has reverberated into the job market, the educational system, our
social institutions, medical care, housing, geographic migration, and global
political unrest. In many ways this generation's purity has
been infected by those preceding them who harvested the golden goose
mercilessly for as long and as hard as they could.
Breaking
it down by demographics, this generation of young adults is the most volatile,
insecure, impoverished, and angry in memory.
Forced to postpone their aspirations of assuming their place in the
public and private domain by economic factors beyond their span of control,
they must now react to forces which accentuate their frustration and delay
their wealth building. This, then, is
the legacy with which current corporate boardrooms must cope.
Amid
this generation's uncertainty, it is no wonder that the markets have taken on a
parallel pulse beat with broader staccato global phenomena, where gratification
must be instant, loud, and in-your-face. Predictability is now a short cycle event. Commitment
is no longer "forever". Confidence
is mostly fleeting.
Uncertainty
is the most certain thing we can attest to.
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