For years now, my writing has focused on the economics behind the market. It is time for a change. It is not that the economics are not important – they are; rather my focus on the battle about the economics is becoming less important.
The reason is that the US and global economies are firming up and settling in for a long good run. This transformation has been in the works for a dozen years or more, and the financial collapse actually helped move the shift forward. True, the lack of liquidity combined with a horrendous recession back in 2008 and 2009 set the global economy back on its heels, but, in that mess, the US government, as well as other global governments, offered up opportunity.
In the form of loans, grants, and outright favoritism, governments around the world pushed open the door the Internet and its related technologies had cracked earlier in the decade. Just look at the world today and contrast it to the world of 2000.
Just yesterday, I walked out of Best Buy carrying a box containing a 32-inch television. I got in my high-mileage car, responded to some text queries via speech recognition, put my Bluetooth bud in my ear, docked my phone, made a hands-free call, and then asked my phone to call my bank. On the way home, I listened to my satellite radio, which delivers music and news from around the globe. My phone announced I had ten minutes to my destination.
When I arrived home, I checked one of my five computers strategically placed about my home, all wirelessly connected on my home network. On the one in the living room, I turned on Pandora, the streaming music station that plays all the music I have ever known, as well as the music I want to know now. My wireless speakers delivered a crystal-clear sound.
In my office, I checked another computer to see how the market was doing. Watching the streaming data, I thought about one of my trades, so I opened my trading platform. I watched the stock of interest and decided to create an alert. I left my office and went to set up the TV I just bought.
Although I struggled with the sound bar, the smart TV went together quickly and easily. Now on my network, the TV immediately added dozens of live channels from all over the world via my local antennae. Switching to the Internet, I immediately had access to thousands of movies, TV shows, and books.
The computer in the TV room melodically notified me I had an email. I went to the computer, answered the email, and, while doing so, my phone notified me the market alert I just set up 20 minutes earlier triggered. I opened my trading platform and closed out my trade.
Heading to the kitchen to make dinner, I opened my micro notebook to check out a list of recipes I had bookmarked on the Internet. The recipes were hyperlinked to referential sites that delivered cultural, historical, and nutritional information about the food. The accompanying pictures defined the finished look of the food.
That night we settled in to watch a movie that cost less than pennies to watch, but while were doing that, the 13-year-old’s phone kept notifying him he had an SMS, or, rather, a text message. It was annoying, so we asked him to put his phone away. “But, mom,” he said. “I need to know what is going on.”
There you have it. We all need to know what is going on because the world today is far different from the world of 2000. The important point is the global economy reflects this reality. Everywhere, the Internet has changed economic focus and purpose for countries, businesses, and individuals. The whole world is changing for the better, and the roots of the “New Economy,” a phrase that is now appropriate, are deep and strong. Middle classes are rising around the world, and right here in the US, the manufacturing depression that has been destroying jobs for over thirty years is ending. New manufacturing jobs are coming online and the folks coming out of colleges are taking them because they are trained to do the work.
Now, I don’t have time today to write about the underlying power of the transformation, but I will be looking at that power as I move down this new path. Energy in all its forms, old and new, is now presenting myriad opportunities to make money in the market. In the meantime, consider the following.
- With 78% of the S&P 500’s companies having posted last quarter’s results, the S&P 500 is on pace to ‘earn’ $26.77 per share. That’s less than the projected $26.94 from a week ago, and even less than the original guess of $26.84 before earnings season began. It’s also 11.5% stronger than the year-ago earnings level.
Never forget, the market is always about the earnings, but, also never forget, economies are what drive the earnings. The hilltop screamers are wrong about where the US and global economies are today, so let’s accept that and move on to the reality of now and the future. Aside from a few bumps coming up from the idiocy of the politicians and the up and down markets from the Fed’s to taper or not to taper issue, expect the economic transformation to continue, which will create more wealth and opportunity for many.
Trade in the day; Invest in your life …
