Remember honest Abe? Most everyone does remember him and holds him in high regard. While he is admired, few can live up to the standard he set.Yesterday as our new president Barack Obama took the oath of office with his hand on Lincoln's bible, the stock market was tanking and the financial stocks were taking the worst of it. The overall market was down about 3.5% and one of the stocks included in Chasing Value: 9 picks for 2009 -- APC, GE, ISRG, WFC and more, Wells Fargo (NYSE: WFC), dropped about 20% -- yikes!
Lincoln served during our nations most trying times and President Obama will not be having an an easy time either.I was pondering some of our many problems this morning, and one that caused me to think about the subject of this post was the gargantuan government budget deficits that know no bounds in our current economic turmoil. That deficit is likely going to be higher than anyone thinks, because the government will be collecting less in taxes based on business and personal financial losses that have grown larger after each budget estimate.
The truth is a lagging indicator (c) because the government announces that we are in a recession nine months after the fact. The "real" unemployment rates are always questioned when they are announced. The manner in which the unemployment rates are often adjusted is done in such a way as to play down any negativity.
The truth is a lagging indicator because every single financial institution has painted a better picture than reality would prove out. This constant spewing of bad information makes them look incompetent or dishonest or both. Perhaps the only honest answer is "I don't know". And that answer, while honest, does not build a solid footing for any recovery.
Perhaps we do not know anything and the combination of doubt and volatility prevents there from being any improvement. We know from history that things will improve in the future and that there are cycles of good and bad times. So the optimists among us are likely to be too early back into the market and the pessimists will no doubt be late.
Where is the middle ground, where is the truth? The truth is, we will only know looking back after we have passed it by unknowingly. That is why someone like Barrack Obama may prove to be the right guy for the job. He has been looked down upon for lack of experience but he has been favored for being able to plan long term yet grapple with the moment very adeptly.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of WFC.
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Reader Comments (Page 1 of 1)
1-21-2009 @ 3:33PM
Lewin Edwards said...
So, to paraphrase what you wrote (if I can make out the words through the crack fumes): By the time news is reported, it's obsolete and of no use for guiding future action. A teenage president like Obama is therefore the right choice for the job because he'll shoot from the hip and might get lucky slightly more often than someone who analyzes more effectively?
God save America.
1-22-2009 @ 7:27AM
Dan Barnett said...
Sheldon,
If you listen to "Old-Time" radio, you'll see that the early reports of any event, like Pearl Harbor, or D-Day are hurried, fragmented, and often simply wrong. You often are too close to events to see them clearly. Or you could view it as Quantum Physics where you can know the direction of a particle or its' momentum, but not both.
Government reports, by definition, report facts and figures that are past, if only beacuse of the time it takes to collect and collate the data. For the financials, were their reports fraudulent, wildly optimistic, or impacted by unforseen events? I certainly don't have that answer.
We see where the last 8 years have brought us. It's not hard to see why America voted for change.