Let's try, shall we, to distinguish between portfolio profits and economic surge. On the one hand, you have valuation expansion by stocks held sometimes by an elite class of investors; and on the other hand you have an attempt at creating viable, long-term solutions for the overall common good.
For
the most part, we as investors tend to fixate upon the former to the exclusion
of the latter. There has been significant
decoupling in recent weeks between officially reported financial information
and our attitudes about our real role in...and benefit from...the whole
process. These subtle distinctions may
not affect you directly, particularly those who are reading a weekly financial
markets commentary. But a very wide
subset of those both connected to and/or dislocated from Wall Street are
nonetheless deeply affected by what I have earlier termed a parallel disconnect. That's
not to say that there isn't a connection between the economy and the
markets. Of course there is. But, in the
main, three month portfolio performance figures do not necessarily define
secular trends. Yes, it is true that as
you feel more "well off" there is a certain spillover effect in one's
mood, spending habits and certain segments of the economy. Who's to argue that these data, by
themselves, couldn't foster longer-term trend development?
But
please don't confuse stock market activity with an equivalence in macro
symmetry, or the quality of political and fiscal debate that could ultimately
lead to better medicine, better roads and bridges, cleaner air and water, and greater
moral relevance. Despite being bolstered
by last week's strong surge in stock prices, confirmation of economic
statistics by the markets is often a fleeting thing.
As
I wrote last week, the data are indeed "healing" after a long
recession and post-recession recovery. More
good news pervades than in the past half-decade. But households and ideologies remain under
significant pressure, and are extremely sensitive to short-term evaluation and
subjective interpretation.
There
are, of course, no "ideal" benchmarks or quotas, but census and
polling data today show that many of us recall feeling more secure, more happy at other times in our lives. Yes, last week's labor figures report that wages
and opportunities are trending in the right direction. We are reaching new economic plateaus in
corporate research, jobs creation, and personal savings. But we don't yet have an across-the-board
sense of relief, nor a feeling of
participation with an emotional/psychological connection to all the economic
good news that one might ordinarily associate with good times.
Therefore,
the question before us is "what to
believe...the statistics or our intuition?"
Compared
to that elusive benchmark of "happiness".... a sense of fulfillment and opportunity....
the markets are doing a terrible job, for the most part, of assuaging our
suspicions or allaying our fears. It's
just too volatile out there.
Yours,
mine, others
This
is why it's dangerous for financial "talking heads" to go on
television or give an interview in the media and cite economic statistics,
only. Obviously, we all have a vested
interest in the stock market doing well, I concede. But the titans of Wall Street's boardrooms
have their eyes on the bottom line and their quarterly profit reports to
analysts almost exclusively....and that's how their stakeholders believe it
should be.
But
ownership of stock, and managing a public company, brings a different kind of
accountability beyond the range of the smallest shareholder, only.
Raising accountability to the level of socially responsible behavior
also constitutes the role of a well-oiled, well-regulated marketplace. Corporate valuation and share price
performance is simply not enough.
It
is obviously better for everyone when stock prices are going up, rather than
going down. But I would ask how many of
you feel a connection to your corporate neighbors or, more importantly, feel
that they share an intrinsic connection with you?
The
merits of the bottom-line cannot be debated.
More closely watched, however, should be the attitudes the general
marketplace manifests on behalf of all "the other guys" who also have
a stake in the outcome. My work in
socially responsible investing, for example, such as our health and life sciences strategy and, currently, our water-related strategies serves as a perfect adjunct to our
broader macro orientation towards capital gains and earnings expansion.
The
sum total of all capital gains should be enough to take care of everyone.
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