What I Think They’re Thinking
 Today’s politician
“My interview begins in fifteen minutes. The polls suggest I’m losing ground to an up-and-comer from the dark side. My colleagues’ scandals are killing me – I’m guilty by association. All I’ve worked for, all the strategizing, my ascent to the political heights I’ve dreamed of since my senior class president days is about to go up in smoke. I know my antagonist will go after me for going after the banks, I’m nervous as hell…
My team tells me I have to stay on topic. They say the only thing the consumer hates more than me is the big banks. We have to deflect, we have to take up arms with the little guy – if we’ve ever needed class warfare, good Lord, we need it now. I hate these interviews – she knows – she knows why we’re going after the banks. She’s going to hammer me on the fact that they’ve paid back TARP with interest, that the taxpayer made money on those deals. And here we are going after their execs with our fifty-percent bonus tax. I’ve got to keep her off the autos, we’re in too deep with the unions. But what do I say if she goes there? We’ve given them $85 billion, they haven’t paid back a dime and there’s no way we’re going after our supporters. I pray to God she doesn’t mention Freddie and Fannie!”
Last week I watched a fascinating conversation between a Wall Street reporter and a sitting senator – I’ll leave out the names to protect the guilty. My above characterization of what I believe to be the painfully obvious thought process presiding over Washington these days (any days for that matter) was vividly illustrated throughout the course of the interview.
Yes, the reporter confronted the obvious – she asked repeatedly; “why would you go after the institutions that paid back the taxpayer, with interest, and not the auto companies?” The senator was virtually frozen; his anemic response was simply; “that’s not what we’re talking about here”. That, sadly, was the best he could do.
Today’s CEO
“My conference call with the analysts begins in fifteen minutes. Finally I have something positive to talk about. With layoffs and other cuts, we’ve whittled our expenses down to a level consistent with production. We’re the most profitable we’ve been in six years. We have more cash on the books than we’ve had in ten. We’ve already taken orders that will generate 70% of our revenue projection for the remainder of this year. The top line is coming back and our productivity is outstanding.
But I have to maintain restraint. I can’t be overly optimistic; it’s not the old days when we could scream from the rooftops and watch our stock soar to new heights. These days they’ll kill us if we’re wrong. I have to under-promise, even though the rest of this year is shaping up really well. I just hope Washington stays the hell out of our way…”
CEOs, for the most part, are bullish on 2010 – particularly in the tech-sector.
Today’s Consumer
“According to my advisor my portfolio made 20% last year, and I’m only about 2/3rds in the market. That’s good, still not back from the peak, but it’s nice to see things bounce a bit. He tells me that companies have been beating their earnings estimates, have lots of cash, are “lean and mean” and are confident they’ll do well in 2010. He sounds optimistic, but he cautions that “when it comes to stocks, anything can happen.”
I’m still worried. 2008 was a mess and people keep predicting we’re going to have hell to pay in the future. They say the government is screwing up royally and we’re going to pay the price. I don’t understand how the economy can be coming back and businesses can be doing so well when everyone’s still so gloomy. Does the market know what it’s doing, or are we in for more pain? Are all the dire forecasts legitimate or are they politically motivated? I just don’t know – it makes sense to me that we can’t continue to borrow and spend and continue to grow the economy. Then again I’m not an economist.
My advisor says that we simply need to make sure my allocation to stocks is long-term and consistent with my age and my personality – whatever that means…”
How else could your average hard-working, money-saving, cable news-watching consumer (with a good advisor) be feeling at the moment?
Yours truly
“Clearly there’s optimism on the corporate front – companies by and large are healthy, at least for now. Stocks present good value relative to earnings and, in particular, relative to interest rates. We all want the world’s governments to get their acts together, but that’s what’s generating all the pessimism – and we need pessimism! Without it, bonds would tank and interest rates would soar to the moon. Too much optimism is a killer for the market. Sure, Washington and the rest of the world need to wake up, but hopefully by then we’ll have something else to worry about. If not, it’ll be time for the next bear market.”
You’ve heard it here numerous times:
“Bull markets always climb a wall of worry” Author Unknown
“A bear (market) tends not to attack when you’re looking for it behind every bush” Yours Truly
“Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria” Sir John Templeton
Of course this doesn’t mean the next bear isn’t ready to emerge from hibernation and terrorize the picnic grounds once again. It’s just that while we look out the window and see rays of sunshine peaking through the trees, it’s still mighty chilly when we step outside in our jammies and slippers…
Have a great day!
Marty
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