The Big Picture - Innovation vs Fear

by Gene O'Dell
Financial Advisor
gene.odell@wachoviasec.com

Since the beginning of our time here on earth, our society continually becomes more intellectually sophisticated than the prior year, or years, before. This sophistication creates innovation and this innovation breeds even more ideas and real world items that are far more sophisticated than the ones that came before them. Some cultures take longer than others, but I am sure you understand where I am going with this.

While our economy is down and we all feel beaten up, I do not think we are down for the count. Frame it this way, do you believe that, in five years, there will be a new cell phone available for sale (which will have more features than most of us will ever use)? What about cars with sophisticated navigation systems (regardless of brand)? Will the medical field continue to be safer, faster, and better than it was five years prior?

In my mind, one of two things will happen in the next five years: We will continue to be an innovative planet and we will get out of this mess in a surprising fashion or some of us, hopefully all, will be in a much better place where money won’t matter. I’m prepared for the worst-case scenario and am staying the course with my investments. If you are confused about what I mean about being in a better place, call me and I’ll explain. Now, I believe in our society, our culture, and our ability to continue our intellectual growth process that is inherent in all of us.

We will continue to innovate and as with investing, be part owners in the businesses that grow. The old saying is, “it’s better to be an owner than a loaner.”

It is important to understand that in economics, the market is a forward looking indicator. As I’ve discussed before, it looks out in advance, in hopes of pricing in the future. With that said, I still feel, and so do the market prognosticators, that the stock market will show signs of recovery in 3rd and 4th quarter. That’s certainly where we are today, even though it may not feel like it.

Economic news, however, will likely continue to sound worse and, as a natural result, we will likely feel worse about the economy. Unemployment will likely get worse over this next year, but consider this; unemployment is a lagging economic indicator. You don’t terminate someone’s employment until after business has slowed, not before. Generally in bear markets, the news gets worse and the market gets better all at the same time. Sounds crazy, but keep the right frame of mind about how this whole market works.

I hope you find this to be informative and I hope you and your family are well. As always, if I may be of service to you, please call me directly or email me. I know times are tough and I also know that perseverance pays off. I am here if you need me, and if you know someone who needs to see this, please pass it on.