Some years back, I lived in the Sierra Nevadas, a rather big mountain range in California. In the summer, I hiked for entertainment. As I remember, the problem with hiking at high elevations is that most all hikes are uphill, at least one way. So, to get anywhere where the view is truly spectacular, one has to slog uphill, and sometimes, especially when one is already tired, the trail just seems to go on forever. One can hike and hike and hike and hike, and the summit always seems just a bit further ahead, just one more switchback to go. This is similar to how I feel about the market this past year. We hiked and hiked, always uphill, and it seems as if we could never get to the top. In this case, reaching the top simply means rising higher than the year before.
U.S. stocks rose on Thursday, putting the S&P 500 on the cusp of finishing out the year higher.
Imagine that! After the year it has been, the market could end up just about where it began. Actually, now that I think about it, this is probably good news, given the year it has been. Thinking back to those days of my youth in the mountains, passing through the economies of my growing up and thereafter, I wonder if the U.S. economy has ever taken such hits in a nascent recovery from recession, a recovery, no less, from an economic downturn second only to the Great Depression in its severity.
Oil prices jumping to excessively high levels is one hit. The earthquake and tsunami in Japan disrupting the global supply chain is another. The floods in Thailand doing the same for the computer industry is still another. Massive layoffs across the board in the government sector, from the Federal level all the way down to small municipalities, have put hundreds of thousands out of work. Reluctant lending from the banks, foreclosures reaching incomparable levels, the reality of strained budgets from high-cost mortgages, and a related construction industry that has yet to get back on its feet weighed heavily on the economy in 2011.
Another hit is just one word – Europe. And, not to be forgotten or underestimated, the political shenanigans regarding the U.S. debt last summer spooked the market, consumers, and businesses. Like a turtle in fear, they all pulled in their heads and disappeared into their collective shell. The news media and the “really smart” pundits beat us all nearly to death with their incessant pounding of the notion of a U.S. default, and, soon thereafter, the drum beating for a double-dip recession kept the spenders in their shells, until this fall and winter, that is.
As we have seen, the consumer and businesses are coming out of their shell, which is one reason the S&P has found its way back to even, and just might see the high-mountain climb end with a view from the top. Yes, 2011 has been one for the books, but even with all the problems, the U.S. economy surged forward creating some 1.7 million jobs. Mind you, those are strictly private sector jobs and the total is less because of the hundreds of thousands of government workers terminated. As well, the U.S. economy managed to bang out positive GDP growth, not a bad feat given all the uphill climbing.
Who knows what 2012 will bring, but, if nothing else, 2011 teaches us that no matter how tired, no matter how deflated from another set of switchbacks, if we just put one foot in front of the other, slog forward, eventually, we will get to the top. Yep. That is what I remember most about my summer hiking days – inevitably, unless you turn back, you do reach the top.
Trade in the day – Invest in your life …
