Signature Update: ARE YOU DIZZY YET? 6/6/2008

I got an email this week from my older brother, who confessed that all of the back and forth in the economy, the array of forecasts and figures published by various groups and boards, and the constant up and down of the markets was enough to make him dizzy. I had to agree. In fact, I confessed to him that none of it meant anything until after something happens, and that it only means something when it happens to you or your business. He’s smarter than I am, and for many years the two of us often explained that together, we know everything, just ask one of us – preferably when the other wasn’t around so we could suggest that this was something the other knew, and knew well. We live in different states now, so it makes the game a lot easier to play.

Why am I talking about my brother in a market and economic commentary? Well, for starters, like I said, he’s smarter that I am… and then there’s also the correlation he may have unknowingly pointed out, that all of this is enough to make you dizzy. If you don’t think decision makers like Bernanke, Greenspan or Buffett are dizzy, think again. The difference between their type of dizzy, and that of most people, is that they’re used to it, and they continue to make decisions and choices towards their stated goals and objectives – they have a plan they can focus on. The fact that they have points of focus lets them continue to see clearly in the midst of tremendous change. While many others can only see what appears to be swirling and turbulent economic times; sometimes bringing on a sort of paralysis as it pertains to their financial thoughts and actions.

Some months ago, we suggested that caution was key in this type of market and that a conservative stance may well be appropriate while the markets adjust themselves to a new paradigm that includes dramatically different energy, real estate, credit and commodities values and availability. In the mean time the DOW has descended well below 12,000 points, has run back up to over 13,000 and has quickly fallen back towards the 12,000 mark. All the while gold, oil, and the US dollar continue their little dance, not unlike the one we’ve seen from our presidential candidates. All of this is testing a near-term bottom in the domestic financial markets. And setting the stage for what may well be a robust 3^rd and 4^th quarter for 2008, with an even stronger 2009. If caution was warranted at the beginning of the year, it appears that it will soon be time to step forward and take opportunity.

As surely as we’ll know who our next president is going to be in a few months, the US dollar will gain strength, oil prices will settle down, and other commodity values will come to rest at levels that allow consumers to continue to purchase them. This week’s unexpected rise in consumer spending is evidence of the ongoing strength of the US economy and consumer – well beyond the benefits afforded because of the stimulus checks some have recently spent. Domestic corporations have continued to fare very well. To be sure, there has been pain in transportation, housing and financial services, but it is focused, understandable, and in time can effectively be countered by inventiveness, strategy and boldness. Add courage to these points, and we have the underpinning of why the US economy will long be the largest, strongest and most vibrant the planet has to offer.