Many will look at the above headline and say..What do you mean by that?
So I’ll explain, and state why I think this may be one of the more important columns I’ll write for at least the immediate to near future. So here goes!….
I’m at my desk just after dinner on Saturday, August 22, 2009 writing this column. I ‘m stating the date on purpose so that whether I’m correct or I’m wrong in my forecasts or assumptions, I can be judged on empirical evidence. Most people who want to be taken seriously or have people make decisions based on their recommendations always seem to leave themselves a way out, or a way to spin the results if they’re wrong. I don’t. I say what I mean based on my experiences, and what I know from previous decisions or circumstances I’ve had to deal with in the real world. Not the hypothetical world of the so called “Experts” ..who leave things so vague they can appear right, no matter where the chips may land.
The Stock Market has just put in a new year record high across all the major blue chip indexes. Nasdaq, S&P, Dow Jones, and Russell 2000. To date not only has the market been skyrocketing up since the lows from March of this year, but now Everywhere You Turn, someone is trying to tell us that The Recession is Over…The New Bull Market is Here….Dow 15,000 Here We Come!…and that just covers the Friday night talking heads. ( And most of these are the fill ins because most are on vacation this week!)
On Thursday it was announced that jobless claims once again rose more than expected. The weekly number was just over 585,000 New Claims. The continuing claims were also higher than expected…just over 6.2 Million. But once again…The experts all touted…” A sure sign you’re in a new Bull Market is when it can shake off bad news.”…..I say…Oh Really?…I heard others stating…” Well the stock market is a forward looking indicator”….again I say ” Oh Really?’….When the market was falling at a rate not seen since the Great Depression, what was it predicting then Hmmmmmm? I guess I’m suppose to not believe the account statements, and 401k statements my friends were howling about because…The market didn’t understand then…It’s sorry now, and wants to make amends….I say Rubbish!..I know you want to ask so I’ll state it so you don’t have to……No. I didn’t lose ANY money, and I actually made money, by taking it out of someones hands ( A Fund Manager), and placing it where it belonged…In Mine! I was scared and nervous at the time that I did it…I was not a so called Trader..or so called Stock type guy, but I had recently retired, and moved to another part of the country.( I was 45 at the time!) when I thought the so called Stock Market which was at its all time high in the Dow Jones over 14,000 that things were looking and feeling very shaky. I had an uneasy feeling about what I was watching in the economy..( Though Every single talking head was talking about Dow 20,000 that year!) I decided if I couldn’t tell why I should be in, or why I should be out at that moment…I needed to get schooled, and get schooled Fast, and the only way to force that decision was to put ALL, yes, ALL my monetary stock decisions of any size or shape directly under MY CONTROL! If I couldn’t defend any of my decisions right, wrong, or indifferent, then I needed to not be involved, or at risk. No Matter How Much Money I could miss out on making! Thank God my decision worked out, but it’s not intended to impress…It’s to try and show I actually live by what I say, which is what more of the so called “Experts” need to be doing. I’m alarmed by the cavalier attitude in which they are all shouting the “All Clear!” signal.
In 2004 I was invited to speak at a major conference for some of this nations largest food companies for their National Marketing Campaign. I found many of the so called “Industry Experts” and others patting themselves and anyone else who would listen on their backs stating “How Great” everything was….How profit’s were at an all time high, and going to continue for years. I heard them state this source…give this example…and on, and on. When I was called to speak I decided to shoot from the hip, No written, or prepared text, just straight from the gut on what I felt and truly believed. I stated the exact opposite of everything they were believing to be true. I stated that if the things that all were ignoring were not dealt with immediately, there would be a shake out that would bring many near bankruptcy. I stated and tried to remind the attendees that it was only a short 18 months prior when most were wondering if their business would even be around for the conference that was taking place at this time. ( The average company size attending were $500 Million to $10 Billion and above annually.) When I was finished you could hear a pin drop, I was given a complimentary applause, and could feel the heat of the stares as I left the conference. ( A couple of attendees later came and thanked me for speaking so direct and agreed with me, but for other reasons felt they could not say it.)
Within weeks of my speech and forecasts the market not only tumbled, but it crashed. The value of most of the products that we sold fell 50% in 2 weeks, then another 50%, then another, ending in approximately a 80% DROP in value for the industry. It wasn’t millions…It was Tens of Billions of dollars, and to this day has never recovered. 4 of the larger companies in attendance no longer exist in the same capacity that they were in. They are less than 1/2 the size the were in 2004…2 more of the companies in attendance that day made National Headlines when they called for Bankruptcy protection in a press release that ” Shocked the Experts”….I bet it did.
By now if you’ve read this far your probably saying to yourself…OK..So what now?
I feel the same way now as I did then…..I’ve written time and time again on things that I see as not looking right. ( See archives..Party 1999…On TV Right…The world has changed…and others posted on this Blog.) But now…It’s becoming more pronounced to me than ever. Since retired I still speak, and write with CEO’s and business leaders on what I think is relevant to their future. But if you want to be taken seriously, and be paid the big bucks…You had better be willing and able to make a call, and live by, and be judged on that call. That’s what you expect from a professional, anything else is left for rookies, and wanna bees….Period!
So am I saying the world is going to end tomorrow?..No!….However, what I am saying that a day of reckoning is not far off the horizon, and I mean weeks to months, ( so not to be confused of playing of Nostradamus.) that can fundamentally change the business landscape for decades, and if you read my post with the headline…“The problems not the pendulum” you’ll understand why I’m so concerned, and why this may be a critical point.
If I’m wrong…Well I can handle that….But if I’m right…I want too at least be on the record as trying to warn of the perils that may be near. Life is tough already both in business and in family. This is one time I hope I’m wrong.
P.S. The federal government announced late Friday afternoon that they underestimated the Federal Deficit over the next 10 years…They projected $ 7 Trillion In DEBT!…….Oooops ….It’s going to be $ 9 Trillion!
Or to make it a little easier to digest.That’s $ 1.00 x 2,000,000,000,000
Want to visualize it better OK…..The experts, and analysts only missed by a stack of……. $ 1000.00 bills..Ready?…..135.8 Miles High!
Close enough for government work I guess.
Also reported Friday, the value of US equities ( Source Bloomberg) lost $ 7 Trillion dollars of value since 2007.
But whats a few Trillion Dollars amongst friends, Right?