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More than anything else, investors hate uncertainty. Unfortunately, at this particular time that is all there is. Much of this is coming from forces, external to the stock market, that are exerting pressure on the confidence of investors.
As our economy prepares to exit from this deep recession, investors are skeptical about the labor market, wondering if and when jobs will begin to be created. Wondering where the more than 150,000 jobs that need to be created every month just to keep pace with population growth will be found. Wondering how long those on unemployment will be able to remain there and maintain their standards of living. Jobs, we read or hear, are tough to come by. Some say “after all, what business is going to want to hire with the uncertainty over the direction of corporate tax rates, the cost of health care or cap and trade.” Wondering how long the Unemployment Rate will stay at or near ten percent.
Forget the job market. Americans are wondering and worrying about the housing market. When and at what value will housing prices bottom. What will the bank do about my home equity or credit line? If you don’t own a home you are concerned that “banks aren’t lending.” You ask yourself, “will I ever be able to buy a home.”
The job market and the housing market are just the foundation of our worries. Add to these worries the concern over rising gas prices, spiraling food cost and the jump in the cost of health care and you begin to panic. Your mind begins to cloud over and then things really become foggy when you think about America, our country. How will we pay for all of this? You begin to worry about the national debt, paying for health care reform and its impact on our children. Our children, oh no. Our children are obese from all of that candy they buy at school and no exercise.
Riding home from work, listening to some talk show, you hear that China, that land that consumes almost every basic material in the world, is slowing down. After all, the talking head you’re listening to notes that their government is trying to prevent a bubble. Thank God we’ve got Ben Bernanke to head our Federal Reserve. But, the talking head next states that he may not be reappointed at Fed Chief. More bad thoughts.
No, things are not good. They can’t be. Too many storm clouds. Too many uncertainties. The sky is falling. Stop! Take a deep breath. Let’s look on the bright side. At least we can rely on our elected officials to do the right thing, to try to get us out of this mess. Uh oh, on second thought, let’s not let our brain go down the path. They squabble like little kids, poking at each other and hoping that the “other side” fails so that nobody will be able to claim victory. The Democrats get a leg up and the Republicans sulk. The Republicans score some points and the Democrats take their ball and go home. Our lives, our country, has become a political football.
How about a novel idea? Let’s rely on ourselves. Let’s dust ourselves off, put our respective noses to the grindstone and fight like we have never fought before. We can do it and we’ll all be better off for it. Pay our own debts. Accept a “hand up and not a hand out.” Become nobody’s lacky. Don’t let anybody buy your loyalty. Accept what is rightfully yours and take a pass on the rest. We need to rebuild Main Street and the Middle Class. We need to have faith, not in anybody, but in ourselves. This is how we get out of this mess.
Oh, but we digress for the last nearly six hundred words! We’re sorry. Thanks for reading this column.
THE BOTTOM LINE – Consider this. Bull markets do not begin when the economy is humming on all cylinders, when there is political peace or when the Unemployment Rate is at five percent. They begin during the darkest hours, amidst all of this uncertainty. We believe that we are entering a corrective period in the stock market, but over the balance of this year stocks will move a bit higher, perhaps high single digits from their calendar year 2009 close.