Having just written up a couple of my most recent stock purchases, I am suddenly struck by how naive some of my bullish commentary sounds. In every investment thesis, there is some risk, and it is always possible to find reasons why a stock can tank. In the current pessimistic climate, writing a negative article makes one sound experienced; skepticism and cynicism is synonymous with gravitas and seriousness. Bullish articles sound out-of-touch and naive at best, and dangerous and stupid at worst. I guess this is just payback for the 1990s, when the bears were the ones that sounded out-of-touch.
Notwithstanding the danger of sounding naive, I’ll close with the following optimistic observations. Yes, we may be headed for or already in a recession, but a prolonged depression is not going to happen. After over-consuming for the past decade, Americans should and can learn to consume less and save/produce more, and give citizens of the developing economies the chance to pick up the slack in global demand and increase their own living standards. One cannot expect foreigners to continue to produce goods for the US at subsistence wages in perpetuity. Therefore a little inflation and currency devaluation is the market’s way of correcting past excesses and paving the way for a new era of American exports. The increase in commodity prices is the market’s way of telling us to stop wasting non-renewable resources and start developing better sources of energy. America, with its dynamic and innovative economy and leading the world in technological expertise, should be able to rise to the challenge of a more balanced global economy and more expensive energy. And picking the correct stocks during this readjustment period should yield good returns, not to mention channeling capital towards the companies and industries most appropriate for this new era.
