Can Anyone Explain the Suspicious Market Sell-Off Since Jan 1?

Like many of you, we’ve been fielding lots of questions lately about stock market turmoil and the global economic slump. While we work with many talented financial advisors and wealth managers, we’re not licensed financial advisors ourselves and don’t pretend to be.

Maybe some of you who are can help explain what’s going on.

From where we sit as individual savers and investors, things shouldn’t be all that bad. To no one’s surprise, The Fed finally raised interest rates a little in early December and it didn’t cause a market meltdown. Throughout 2015, the Middle East remained highly unstable, the Chinese economy slowed dramatically, oil prices plummeted, corporate earnings in the U.S. were mediocre, and the U.S. dollar rose consistently against most other major currencies thus, making our exports more expensive.

OK. We get it.

But what’s really changed since Jan 1?  All these factors were at play long before the calendar flipped over to a new year and most U.S. stock indices ended 2015 flat +/- 1 percent. Why are we down about 10 percent already this year, the worst start to a new year in history?

We’re also confused because the domestic economy—while not great—hasn’t had a single quarter of declining GDP. We believe you need two of those in a row to have a recession, right? Also, the jobless rate fell to an 8-year low of 4.9 percent and the past six months were the best extended period for employee paychecks since the recovery began 6-1/2 years ago. Housing supply reached the lowest level since 2005 and the “quit rate” hit a 9 year high–that’s the percentage of workers who quit their jobs voluntarily to take a new job or who have the confidence to find a new job soon after leaving. Finally, with oil prices at such low levels, shouldn’t U.S. consumers be benefitting from much cheaper prices at the pump and much lower home heating bills?

Conclusion

Again, these are concerns of rational, individual (i.e. non-professional) investors and savers. Please contact us directly if you can share any light from the trenches. We’d love to hear from you.

Have a great Valentine’s Day. Be thankful for the one’s you love.

Our blog and website has more about this and related topics.

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TAGS: bear market, recession, volatility, stock market

Thanksgiving Food for Thought

Stop your bellyaching. Reduce restrictions on education, science and entrepreneurship and let high potential startups get big fast.

If you’re going to a Thanksgiving gathering of more than three or four people this week, chances are the dinner table conversation will eventually veer toward politics and the economy. Trust us on this. The football games. All your nieces and nephews are way above average in everything they do, and Aunt Mildred’s gall bladder operation will get tiresome after an hour or so.

While your relatives are moaning about their bloated tummies and underfed 401(k)s, try this for fun. Remind them that (a) we have a lot to be thankful for and (b) economists have predicted 27 of the last three recessions and the Great Economic Disruption we’re still struggling to emerge from wasn’t technically a recession--much less a depression.

Say what?

That’s right. It’s just been a period of extremely “slow growth” according to Forbes Publisher, Rich Karlgaard’s latest blog post

Now you might get a fork in the eye from a family member who’s recently lost a job, a home, been transferred far away or been forced into early retirement. But Kaarlgard argues we’ve been so accustomed to economic growth rates of four percent or more, that when it gets down to one or two percent, it actually feels like a contraction.

Since 2008 the U.S. economy has performed slightly better than flat. In 2008, 2009 and (projected) 2010, the U.S. GDP was (and is), $14.3 trillion, $14.2 trillion and $14.6 trillion.

Experts say the American economy has averaged 3.3 percent growth annually since World War II. But even small changes in GDP cause big swings in stock market values, investor animal spirits, and consumer sentiment, says Karlgaard. That’s why 4 percent growth feels like a boom, 2 percent growth feels like a recession, and flat feels like the 1930s. Karlgaard argues that America is in a “growth recession” which is anemic growth of less than three percent, but still growth statistically speaking.

The Kauffman Foundation, says the key to getting the economy booming again is directly correlated to startups that get big.
Kauffman’s Carl Schramm has said on several occasions that “the single most important contributor to a nation’s economic growth is the number of startups that grow to a billion dollars in revenue within 20 years.” Schramm says the U.S. economy, given its large size, needs to incubate 75 to 125 billion-dollar startups per year to feed the country’s post World War II rate of growth. Faster growth requires even more successful startups.

While the strength of the Forune 1000 certainly helps the overall economy, entrepreneurship has always been the key. But, even though small business is credited with creating the bulk of new jobs, Schramm says that’s not enough either.
He says we need an “X-factor” –a hundred or so companies, per year, that launch, find a market, execute, scale, learn, adjust and sail over the billion-dollar mark within two decades. They don’t have to be Googlesque. But they’ve got to be bigger than Mom, Pop and Uncle Joe.

If we’re going to get those 100 stars to the launching pad, Schramm says we better get serious about removing the tax and regulatory barriers for these kinds of startups with the potential to scale.

For example: how about any immigrant who graduates from a U.S. university should get a green card along with his/her diploma? So should any immigrant who starts a business that grows to more than 5 people on the payroll. Ambitious immigrants, disproportionately, create growth companies.

Chances are there’s a family elder around your Thanksgiving table that fits this description. They may not know an app from a nap, but they probably had super-size helpings of courage (and cajones) and didn't stop looking for new customers and serving their existing customers just because times got tough. We guarantee you’ll learn something.

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Bad News, Recession Over. Risk Taking, Personal Savings Up

Are companies ready for pent up spike in demand? M&A, IPOs, SPACs return. Fasten seatbelts as ides of October approach on anniversary of financial crisis. Have we learned anything?

With the Dow Jones Industrial Average knocking on the door of 10,000 – a benchmark seemingly out of reach six months ago – and nationwide home prices up for the second straight month, both leading and trailing indicators of the economic rebound we first called in this blog in April are all around us. From a technical perspective, the "recession is very likely over at this point," U.S. Federal Reserve Chairman, Ben Bernanke said in a mid-month Q&A session at the Brookings Institution. So why aren’t homeowners and job seekers rejoicing, let alone the marketers who target them?

The Dow 10,000 barrier is mostly psychological, but as Stuart Freeman, senior equity analyst at Wells Fargo Advisors told the New York Times this week: “It’s psychological, but if enough people act on it it’s meaningful. The higher the market goes, the more those on the sidelines sit there and are concerned they’re missing something.”

Why we’re still worried

Home prices nationwide are still 13.3 percent lower than a year earlier, according to the widely followed S&P/Case Schiller Index, but recent monthly gains show that the pace of decline has slowed. Housing aside, several trends concern us at this juncture. First, the Government, including the Fed, is not in the forecasting business. It’s in the restating-the-obvious-but-making-it-official business. Second, we’re not convinced the fundamentals are there to support a sustained rally in the economy. More on that in a minute. Third, and perhaps most frightening, is this economic turnaround might be for real.

What’s wrong with that you say? Plenty. For starters, most companies are not be prepared to handle the surge in pent up demand, as they trimmed their workforces, production capabilities, customer service departments and marketing budgets so severely during the downturn. Cost-cutting occurs faster and deeper, than re-hiring and re-investing. The only thing worse than having customers bail on you when times are lousy is having them bail on you because you can’t handle their orders when times are better.

And here’s where it gets tricky. Even if the Fed and the financial markets are correctly signaling the end of the Great Recession of 2008-09, 15 million able-bodied workers – about 10 percent of the full-time work force -- are out of work. Combine that with stagnant incomes for all workers and higher rates of personal saving (due to fear, not financial discipline) and this could reduce corporate revenue for years to come. We’re also dealing with massive consumer defaults on credit cards, record numbers of mortgage defaults, delinquent student loans and stagnant incomes for those lucky enough to be working. Oh, and housing unit sales (not prices) went down another 2.7 percent in August, we learned last week.

Where is the money going to come from, to purchase those goods and services we need to keep the economy humming? More than 70 percent of Americans still rate the job market “bad” according to a recent Harris Poll. Paychecks have been stagnant for about a decade and using one’s home equity as an ATM machine – essentially what kept the Great Recession at bay for about three years – isn’t a viable fallback this time around.

Cautious Optimism for The Economy Ahead

Results of the latest Harris Poll of 2,498 U.S. adults surveyed online show that there is a slight sense of optimism regarding the economy. Nearly half (46%) of Americans believe the economy will improve in the coming year, while a third (32%) say it will stay the same and 22 percent believe it will get worse. In May, just under two in five believed the economy would improve in the coming year while over one-quarter said they thought it would get worse. But overall, they’re not so confident about their own situation, which is a great departure from most economic climates in which survey respondents tend to say they’re better off – not worse off -- than their neighbors.

One-quarter of Americans believe that their household financial condition will be better in six months while half say it will remain the same and 28 percent believe it will get worse. If there’s a silver lining to this cloud, consider that the 28 percent who say their household's financial condition will get worse in the next six months is the lowest reading for this question since Harris pollsters first asked in February of 2008.
Greed and irrational exuberance

Twitter –- a 60-person online social networking company with a catchy name and no revenue to speak of, was recently valued at $1 billion as it announced plans to raise $100 million to salivating venture capitalists. The markets also bounded higher on signs that companies once again had enough cash, credit and confidence to enter into big M&A deals. Xerox, Abbot Labs, Dell, Disney and Kraft Foods have announced takeover plans. Could credit really be flowing again between banks and corporate giants? At least the lawyers are happy.
What’s more, last week was the busiest for companies completing IPOs since December 2007. The Wall Street Journal reports some two dozen firms have filed plans to go public in the past two months, which is twice the number who filed to go public in the first seven months of this year. Has the IPO pendulum swung back to “Initial Public Offering” from two years of “It’s Pretty-Much Over”?

If that’s not enough to convince you investors are regaining their appetite for risk, more than one billion dollars in acquisitions took place last week through special purpose acquisition companies (SPACs). What’s a SPAC? It’s basically a “blank check offering” that allows investors to raise money through an initial public offering, and then gives them up to two years to buy a business as long as the sale receives shareholder approval. Sounds pretty spaculative.

Media spending still lagging

More than one-third of marketers plan to cut their advertising budgets over the next six months, according to he latest Association of National Advertisers (ANA) study. While an improvement from the 50-percent budget cutting threshold ANA reported earlier this year, the times ain’t exactly flush for marketers or media owners. As even ANA will admit, budget cutting tends to get under-reported in forward looking surveys (turns out 61% of marketers, not 50% cut their budgets over the past six month, according to ANA research).

If you’re a media buyer, now might be the time to pounce, as traditional media owners will do just about anything to get your business. The top 100 advertisers spent 10.2 percent less than they did in the previous year, according to the latest data from TNS media Intelligence and magazine ad pages are down 22 percent through October according to the latest Publishers Information Bureau. Network TV spending was down six percent, and newspaper advertising was down nearly 11 percent over the same period, TNS reports.

Another disturbing data point for media owners is that new research indicates lead generation is what advertisers want these days, not building brands or customer “buzz.” That means every dollar counts and will be measured and held accountable. Nearly 70 percent of marketers surveyed by MarketingSherpa last month said “Generating High Quality Leads” was their biggest challenge, more than twice the number who pointed to brand building, public relations buzz and nearly twice the number who pointed to creating perceived value in “cutting edge” product benefits.

The one bright spot, not surprisingly, was Internet display advertising – up 10.8 percent -- as more marketers shifted funds online. “Perpetual movement is the essence of survival and prosperity online,” quipped Michael Moritz, the Sequoia Capital investor who backed Google, Yahoo and Sugar a fast growing consumer blog network in a New York Times interview last week. “If online media and entertainment companies don’t improve every day, they will just wind up as the newfangled version of Reader’s Digest — bankrupt.”

Welcome to Q4, the last fiscal quarter of this topsy turvey decade. Fasten your seat belts.

Recession’s Over (If You Still Have Customers or a Job)

Savvy marketers carefully placing their bets. Research confirms C-Suite and business travelers increasingly embrace the Web. Don’t be a ‘shoulda-woulda-coulda.’

Factory output is growing again. That’s right, the smokestacks and assembly lines are humming anew as we registered the first uptick in the monthly National Association of Manufacturers (NAM) Index since December 2007. Experts say manufacturers cut production so sharply during downturn that they depleted inventories and must now ramp up production to meet demand. Any of this sound familiar to you over-reactive media buyers?

Most economists surveyed by The Wall Street Journal earlier this month believe that the recession is over – a milestone we first called in this blog back in April ("Recession Running Out of Steam"). Stocks have been rallying throughout the summer doldrums, and even Fed Chairman Ben Bernanke declared last week that the global economy is starting to emerge from recession. The S&P 500 stock index closed at a 10-month high after last week’s nearly two percent advance.

On average, surveyed economists expect to see a 2.4 percent increase in output in the third quarter, at a seasonally adjusted annual rate. Construction of new single-family homes has started to climb. Auto sales are up and even sales of existing American homes rose a surprising 7.2 percent to their highest level in nearly two years as cheaper prices and the availability of tax credits continued to entice buyers. Cynics will say it’s a bottom-feeding frenzy, with buyers pouncing in distressed and foreclosed homes. But the smart money says this is more than just a housing sector version of the cash-for-clunkers auto program.

Regular followers of this blog know we’ve seeing nothing more than a natural shakeout of home ownership as we revert to the historical mean of 63.5 home ownership among U.S. households. That’s just a tad under two out of three as we saw in the mid 1980s. Home ownership rose to about 70 percent in mid 2005, just before the bubble burst. It’s now about 67.5 percent and experts say it will gradually go back to 63-ish range over next 10 years. That’s a painful regression to the mean, but just like a .400 baseball hitter entering the dog days of August, you can’t fight the long-term law of averages forever. We love you Joe Mauer, but you can’t beat the almighty Oracle of Equilibrium of the long haul.

The labor market remains one of the biggest soft spots for the economy, though the July monthly jobs report had raised hopes that the worst may be over. Here’s another way to look at it. At no point in our nation’s history have more households felt the need to have both spouses working. And how many American households feel they can get by on just one income? Less than half. That’s right, just 47 percent, according to Country Financial’s Job Loss and Financial Security survey of nearly 800 married employees.

The flip side of equilibrium, of course, is that suffering sectors, like employment will eventually return to the historical norm of about 4.5 percent, from today’s 9.5 percent. You can bet your last Obama button we’ll get there before his first term ends and that’s a heck of a lot of jobs created.

If you buy or sell advertising, you better start taking these macro factors into account, or you’ll be caught in a media inventory shortage that could derail even the best laid of marketing plans.

Webcasting, not just a cool medium. It helps the bottom line

If the live conference and events business didn’t have enough on its plate, a new study by the National Business Travel Association found airports and local governments are not only gouging travelers with prices, but sticking it to them in taxes. The NBTA study found travelers not only pay a local sales tax, but they also spend up to 172 percent more in taxes aimed at visitors each day that they stay at a hotel, dine and rent a car.

In addition to the convenience and improved technology of Webinars, Webcasts and audio seminars, the travel industry continues to sock it to business travelers. Taxes targeting travel-related services – especially at the nation’s busiest airports, like Chicago O’Hare (no surprise), can cost a Fortune 500 company, $50 million to $60 million a year, says NBTA research. “In a tough economic environment, many state and local governments have relied on the old habit of targeting travelers to make up revenue shortfalls, said NBTA.

It’s official. The C-Suite is online

The Internet is the most important source of business information for 60 percent of top executives finds a new report from Forbes and Gartner Group.

Researchers found senior executives spend nearly 16 hours on the Web each week and nearly three in five C-Suite execs hit the Web before they go to work. When they get to work, nearly seven out of eight (86%) check e-mail and half (46%) visit Web sites BEFORE they do any other work. Here’s what they’re up to according to the Forbes/Gartner research gurus:

• 73 percent are doing research
• 65 percent are looking for business and financial news
• 52 percent are checking on competitors and industry trends
• 45 percent are seeking information about products and services
• 32 percent are investigating potential new business partnerships.

So when you’re inundated with wimpy pronouncements from the experts like “cautious optimism,” or “eventual gains” or “starting to emerge,” just think back to where we were six to 12 months ago in the depths of “doom and gloom.” We’ve come a heck of a long ways and if you don’t think that’s a turnaround, then you might want to call your physician and you’re your blood pressure checked. Now is the time to pounce on whatever delayed purchase or strategic initiative you’ve been mulling over. It’s going to be a long, long time before you see cheaper, easier, better or funner time to cut yourself a good deal.

Headfake or a Legit Rally?

Nobody knows. But at least some folks are out on the field and they're “in it to win it.”

New numbers from Forrester Research predict that interactive marketing spending will hit $25.6 billion this year -- up 11 percent from $23.1 billion in 2008, despite being flat, as marketers shift money from traditional media to digital channels. That total, which also includes search, email, social media and mobile marketing dollars, is expected to more than double to nearly $55 billion by 2014. "This growth is due to marketers seeking lower cost, more accountable channels which are also widely used by their customers," wrote Forrester analyst Shar Van Boskirk, in a blog post previewing the firm's interactive spending forecast due out in June.

A recent Forrester survey of more than 200 marketers found that 60 percent planned to increase interactive budgets by pulling back spending on traditional outlets. The biggest victim of the trend will be direct mail, which stands to be slashed by 40 percent. Print will not fare much better, with spending on newspapers expected to be cut by 35 percent, and magazines by 28 percent.

By contrast, mobile and social media will enjoy the biggest spending gains in interactive -- increasing nearly 70 percent to $391 million and almost 60 percent to $716 million, respectively, in 2009. But the recession's toll on other segments will leave display advertising virtually flat at $7.8 billion, and email up only slightly to $1.2 billion. Search marketing, which will get a lift from the shift of traditional and online display ad dollars, is expected to grow 14% to $15.4 billion.

Over the next half decade, however, Forrester expects online display advertising to grow at a faster compound annual growth rate (17%) than search (15%) or e-mail marketing (11%). We’re reaching out to Forrester to see if they will explain this phenomenon in their next report due out in June.

As a harbinger of things to come, American Business Media's just-released 2009 Media Financial Survey, showed B2B media company revenue declined 2.2 percent in 2008 versus 2007, but revenue growth in online, live events, and data products helped offset declines in revenue for magazines. Of the six key B2B media company revenue categories (Magazines, Custom Publishing, Data, Online, Tradeshows and Conferences), Online revenue showed the strongest growth, increasing 15.1 percent in 2008, and rising at a CAGR of 26.8 percent from 2006. Magazines were the weakest performers, showing an 8.4 percent decrease in 2008, and a decline of 3.9 percent on a CAGR basis over the three year period.

Search and display ads work together

Just as global marketers are learning to weave together old and new media into their campaigns, it no longer has to be an either/or decision about which form of digital to deploy. New research from iProspect indicates display ads do influence search behavior. The findings rely on data to support industry rhetoric that display ads and search work together to provide a bigger impact on campaigns. The "Search Engine Marketing and Online Display Advertising Integration Study" suggests that while 31 percent of people click on display ads, nearly as many – 27 percent -- go to search engines to provide a search. More than 20 percent type the company Web address into their browser and directly navigate to the Web site, and 9 percent respond by investigating the product, brand, or company through social media.

More signs of things at least not getting worse

• Although unemployment (8.9%) is at its highest level in decades, NEW claims for state unemployment benefits fell sharply last week, the fourth decline in five weeks. Many economists say this trend provides further evidence that the pace of layoffs has slowed after months of steep job cuts.

• Nonfarm payrolls fell 539,000, the smallest decline in six months

• The equity markets are not giving back their historic gains of the past two months – the Dow and S&P are up nearly 30 percent from their March lows and at or near positive territory for the year to date…..Bring on the headfake.

• OpenTable, the online restaurant reservation service, could soon become the first venture-backed company to be brought to the public markets in nine months. It’s a real company, whose service is easy to use, widely adopted with a legit balance sheet behind it. {Disclosure: We have perused its SEC filings, but have no financial stake in this company}

Fred Wilson, a partner at Union Square Ventures and a blogger about venture capital, recently wrote that the I.P.O. drought for venture-backed companies would end in the next year and perhaps by the end of this year. “I don't know if this market rally we've been having is a headfake or the end of the bear market. My gut says we'll see at least one more pronounced down move before we see bottom.”

For one, he said, venture capitalists have been punished long enough for selling shares of so many undeserving companies during the dot-com bubble. There are many high-quality companies sitting in the pipeline, ready to go public as soon as they can, he said. He argued that many of them — including OpenTable — have business models such as subscriptions, which make for strong public companies.

It’s similar to the equity markets in which many traders and analysts remain cautiously bullish on stocks. How come? In part it’s because pressure is rising for investors sitting on the sidelines to put to work their excess cash, which is garnering little interest because of the Federal Reserve's rock-bottom target aimed at spurring an economic recovery.

"The fundamentals almost don't matter at the moment," Cantor Fitzgerald strategist Marc Pado, told the Wall Street Journal today, pointing to recent data from the Investment Company Institute showing that retail investors are holding almost $4 trillion in cash reserves. "If we even get a small percentage of that money come into the market, you can easily get another leg to this rally."

Back to I.P.O.’s, the picture is not exactly rosy. I.P.O. filings are down 94 percent compared to last year and there have been only four I.P.O.’s this year, versus 28 by this time last year, according to Renaissance Capital’s IPO Home.

Still, there are some good signs for technology companies in the pipeline. Over the last 12 months, tech I.P.O.’s have been the most popular. Technology I.P.O.’s have returned on average 28 percent and health care and biotech I.P.O.’s have returned 24 percent, while all other sectors, including clean energy, have posted negative average returns, according to IPO Home.

Can the Big 3 business magazines save themselves?

Like the Big 3 automakers, the Big 3 business magazines may have to undergo a dramatic and painful restructuring to stay in the media game, says TechCrunch columnist Sarah Lacy. She says it’s a near certainty that Forbes, Fortune and BusinessWeek, will be cutting staff and frequency, but can still maintain some form of long-form investigative stories they’re famous for.

Here’s Lacy’s call for competing with blogs, Web pubs and other immediate, lower-cost forms of journalism: "ruthlessly collapse" the print and online versions into one unit, churn out one or two cover-length pieces per print issue while filling the rest with the best stories and user comments from the Web.” Then cut the money spent on courting new subscribers, and shift the entire marketing budget to promoting the Web product or real-life conferences and branded events. You’ve now got one publication, not two pretending to be one. One publication is a lot cheaper, even if it's printed on dead trees. Under this system, Lacy says, 99 percent of your staff's focus is on the online product, with the other one percent devoted to writing lengthy features for the print pub, which will continue to attract a separate audience. Yes, your pub will operate more like a blog, but it won't sacrifice the print ad revenue stream, either.

Food for thought.

As we’ve mentioned numerous times in recent months, every crisis breeds opportunity. You’re never going to get an “ALL CLEAR” memo in your inbox saying “The Great Disruption” is finally over, so it’s OK to resume hiring, spending and innovating. So if you think there’s even a reasonable chance things are not getting worse, then they’re probably a lot better than you think.

As Daniel Pink , author of Free Agent Nation, notes, our nation’s continued viability depends on what he calls the “imagination economy” – things like creativity, vision and playfulness – that cannot be outsourced. Now’s the time.

Recession Running Out of Steam

When will decision-making freeze start to thaw?

Remember back in late 2007 when you got that disturbing memo from the U.S. Department of Commerce announcing plans to kick-off the next great global recession? Of course not. So what makes you think you’re going to be notified when this painful economic downturn finally ends? Trust me, you’re not.

By the time you get the “all clear” signal and spread the good news to your colleagues, it’ll be too late. Your competitors -- who smartly put new products and services into the pipeline during the depths of the downturn – will have passed you by. Their salespeople will have a leg up on yours, with a much better story to tell potential customers. And since they didn’t can all their experienced (i.e. more expensive) people and slash their marketing budgets as severely as you did during the “panic,” they’re taking away big chunks of your market share and mindshare every day. Good luck getting that back …..It’ll only take a few years.

Granted, we’ve got a long way to go. As I write this, the U.S. Labor Department is announcing 663,000 more U.S. jobs vaporized in March. That’s pushing the official unemployment rate to 8.5 percent, its highest level in 25 years. But, in this hyper-speed global economic climate, you’ve got to have new products, services and people at the ready to support them in advance when pent up demand for your goods is finally unleashed. And this is going to be one heck of a release.

Not convinced we’re on the road to recovery. Read on (or go jump off a ledge).
1. Economists and Wall Street analysts (egged on by the media) have successfully predicted 15 of the last three recessions. They have the same lousy battering average predicting recoveries and no bona fide “expert” has stepped up to give the green light on this recovery yet. So I like our chances.

2. The labor market historically lags the stock market and other economic indicators by six to 12 months. Even today’s depressing news about the job market was largely discounted by investors as the grim job loss numbers, albeit painful, were in line with what analysts and investors expected. The market actually went up again today and continued its four-week rally in which it has gained 21 percent– its best four-week advance since July 1938.

READER NOTE: I recommend Barton Biggs’ tome: “Wealth, War and Wisdom” (Wiley & Sons, 2008) for a great perspective on the stock market’s ability to forecast global economic conditions during the 1930s and 1940s. The parallels are striking between today’s climate and that of the Great Depression and World War II. It’s a scary, but interesting read (Disclosure: we have no financial interest in sales or promotion of Mr. Biggs’ book).

3. Manufacturing. The Institute for Supply Management said its March report index rose 36.3, from 35.8 a month ago. New factory orders increased 8.1 percent and General Motors isn’t going to be allowed to make cars anymore unless it starts making them affordable, reliable and environmentally sound.

4. Housing. The National Association of Realtors reported that sales of pending homes rose a seasonally adjusted 2.1 percent in February from a month earlier, bolstered by double-digit increases in the Northeast and Midwest. The index of pending-home sales — which encompasses deals that have signed contracts but have not closed — bounced off a record low. The group’s index of affordability rose to a record as home prices continued to slide and mortgage rates declined to a microscopic 4.61 percent.

5. Huge cash on the sidelines. The stock market is rallying at a time when four out of five institutions and affluent individual investors are planning to switch advisors. “It’s an amazing time with huge upside potential for everyone, including financial advisors,” notes HB client, John Bowen, founder of CEG Worldwide, LLC the nation’s leading coaching, research and advisory firm for wealth management professionals. “This is not a recession or The Great Depression again. It’s The Great Disruption,” says Bowen. The rules of the game are changing fast and will never go back to where we were before. Despite massive erosion of investor wealth over the past 12 months, John’s firm and his clients are actually having one of their best years ever.

6. Broad-based rally. On most positive trading days the Russell 2000 has outgained the S&P500, which has outpaced the Dow Jones index. Companies of all size, industries and market caps are starting to rebound.

7. The Financial Accounting Standards Board (FASB) might finally change the rules on "mark to market" ccounting so bank assets will be measured by their cash flow, not the last trade. Not only is this a healthy dose of pragmatism but it could dramatically impact bank financial statements, valuations and profitability.

8. Labor shortage. That’s right, we said shortage. Even with unemployment rising, some companies now realize they may have cut back their payrolls too aggressively. Duh! Workers who survived the cuts are doing at least twice the work they did before for the same pay or less. They’re burned-out, paranoid, dispirited, and planning their exit strategies, not thinking about company growth.


A neighbor of mine runs an online lead generation company and customer acquisition service. He said some of his clients’ sales reps are taking days, even weeks, to respond to even high-priority leads. They simply don’t have enough manpower to handle demand. He said one of his clients in the mortgage finance is begging her boss to hire back at least 80 of the loan officers they let go in 2008 to handle the workload.

9. Some of the more innovative and adaptable sectors of the advertising industry are still growing at impressive rates. For instance, Internet advertising rose in 2008, according to a report released earlier this week by the Interactive Advertising Bureau and PricewaterhouseCoopers. Internet advertising in the United States grew to $23.4 billion in 2008, an increase of 10.6 percent from 2007, according to the Internet Advertising Revenue Report from the Interactive Advertising Bureau, a trade group representing online advertisers. That was the only category of advertising spending that grew in 2008 other than cable television, which rose 7.8 percent, according to Nielsen figures supplied for the report.

10. Weather. While our hearts go out to those in the flood-ravaged upper Midwest, spring has come to the Northeast, where let’s face it, a great deal of major companies and investment firms reside. There’s always a feeling of accomplishment in these parts that you’ve survived another winter and the onset of spring make everyone feel better and more optimistic. And for many home owners in the northeast, heating oil prices (our biggest worry nine months ago…HA!) ended up being only half as high as what we were dreading as recently as last summer.

11. Hero redemption. Tiger Woods is back on the pro golf tour and Lance Armstrong is cycling again. I don’t play golf, but a great number of corporate decision-makers still do and more than a few are biking and triathloning. After surviving cancer, drug allegations and now a broken collar-bone, Lance will some how manage to get himself into contention for an unprecedented 8th win at the Tour de France, the world’s toughest athletic event. Meanwhile, Tiger won the Arnold Palmer Invitational in typically dramatic last-hole fashion, his first competition after a year-long injury layoff. TV ratings were through the roof and that’s yet another sign for the corner office-set that things may be finally returning to normal in the world.

12. Even lawyers are taking a hit. The days of fat retainers, exorbitant hourly rates and paying first year associates more than the President of the United States makes, may be coming to an end. Law firms may have to start charging clients on a fixed-fee project basis, like every other professional service firm does. Leading law firms have historically avoided mass layoffs, concerned that their reputations would take a hit. But some have been putting those inhibitions aside. The Law Shucks blog now has a “layoff tracker,” and it is pretty telling. Top firms are rapidly thinning their ranks, and several — including Heller Ehrman, a venerable 500-plus-lawyer firm founded in 1890 — have closed. While not a lawyer basher by nature, having law firms align their fees and associate compensation with the rest of us will make everyone’s goods and services a little more affordable.

13. Perspective. Whether or not you believe the worst of this crisis is over, we may finally be taking a healthier approach to work-life balance in this country. “Today’s average business person exists in a perpetual state of exhaustion and stress that is born out of feeling that they are burdened by more responsibilities to meet than they have time and energy to devote to doing so,” said Chuck Peck, CEO of Cape Coral, Florida-based Wealth Intelligence Network. “They work, work, work, yet feel they are merely chasing their own tails. They never seem to be able to meet all the obligations of life without neglecting their commitments to themselves, their relationships, and their families, and vice versa.” The key, says Peck, is to keep moving. “An object at rest stays at rest; an object in motion stays in motion. Always stay in motion.”

Words to live by.

So let’s get back to work. Hire good people to help us and treat them right. Market the heck out of what we have to offer and let’s start making money again.