Composure needed during turbulence

Not only the weather is mixed up, the economy is, too. That’s not news. But here is a different slant on the issues.
First, two of the nine change forces I examine every so often are the socio-economy and politics-governance. These two are very closely linked.
But first, as a reminder, here are the other seven again: Population, Information, Technology, Resource use, Death, Values, and Nature.
It is useful to track what is going on in each of these in order to have a better grasp of the present and near-future.
Now about the economy. Did you know housing starts continue to “be up” since about a year ago? And that vehicle sales continue at an all-time high? These are two indicators that consumer spending on big-ticket items is going well.
Air travel is still down, but many forms of less-costly recreation and self-indulgence are popular. All those suggest our economy is doing quite well.
Currently, Canada has a better economic climate than the U.S. Why? We are less worried about terrorist activity, and we are less affected by the major business scandals recently uncovered.
But we are having sympathy pains—the stock market is not in sync with our economy.
If you have talked to an investment broker lately, you may have heard these points. I won’t call them facts, but they are interesting:
•In every one of 19 recessions since 1912, the stock market led the economy to recovery. Not this time.
We are seeing a big “disconnect”—a lack of confidence in big business and the fear of terrorism are holding the stock market back while business is actually going well.
•During the technology boom, people bought lots of stocks, running up prices far beyond actual value. They “overbought” and “overvalued” companies.
Nortel was a prime example at $120+ per share (it was just not worth that much).
•The market “overbuys” securities most of the time. Just think about how attractive any stock is made to sound that someone wants you to buy.
But currently that’s not happening. The “fear factor” presently is stronger than the “greed factor,” keeping people from buying stocks.
•A lot of value has come back into the market due to massive over-correction. But it probably will have to grow another 15-20 percent before people are confident again.
By that time, they will have lost the early, low-cost opportunities.
A lot of investment broker talk, you say? I agree. And when will all the good stuff happen?
One prediction is that once the corner is turned, the market will grow eight-10 percent in the next two-three years—but not the 20-40 percent it ballooned before the last bubble burst!
The broker I asked wouldn’t commit to a date for “turning the corner” (next week, next month, next year. . . .)
The upshot recommendation? As before, get rid of debt, put something by that is secure and liquid (like GICs)—and enjoy the summer!
Linda Wiens is president of Quetico Centre near Atikokan and executive director of the Prairie Crossing Institute in Chicago; as well as an educator, writer, consultant, and facilitator.