Thinking About the New Year

Each January I am energized by the prospect of fresh new ground to plow (metaphorically speaking) in the capital markets. Although long-term investors need not mark the passing of an old year in any special way (if you think about it, December 31 is no more special than July 4 or any other day for the long-haul investor), we tend to do exactly that. Along with all of the traditional holiday trappings which accompany the end of the year, we also see the obligatory forecasts from Wall Street strategists giving their best guesses for the new year. I often wonder why in our industry we tout the virtues of investing for the long run and we (investment professionals) send out quarterly performance statements!

So here we sit with most of 2009 still ahead of us and the train wreck that was 2008 still etched in our minds, ringing in our ears, and still visible in our rear view mirrors and yet I feel somewhat hopeful and quite positive. Granted, the news on the economy is unlikely to be anything but horrid for a while, but eventually this too will improve. More important than the headline news on how the economy is doing, is what we are seeing at the micro level at corporations. Although the bulk of corporate activity is still mostly negative, we are seeing some very early, very preliminary signs that inventories are being worked through and that here and there we are seeing a few new orders. This is probably not enough to make the front page (after all gloom and doom still seems to sell newspapers), but it may be something for the stock market to begin paying attention to.