Thursday, October 23, 2008

It's NOT the economy

I know you, like me, are probably totally fed up with hearing about the stock market. But when you're done reading this, maybe you won't want to shoot the messenger.

Okay, the stock market, the number most often reported by the media is the Dow Jones Industrial Average. Yes, yes, nightmare isn’t it? In the pits. It reflects the value, or perceived value, of a collection of 30 stocks thought to represent U.S. industry. That's it. Nothing more, nothing less. Only 30 stocks! It's not a barometer for everything going on in the economy. It's not even close. Heck they are not tracking my company and the fact we grew by over 14% in September. They did not even call us to get out preverbal opinion (and I have an opinion on everything, but then you probably already know that).

During the past year, the DJIA hit a high of 14,118.52 and a low of 7,882.51. The peak and trough didn't occur one year apart, they occurred sometime during the past year, but for the sake of discussion, let's just assume that they occurred 365 days apart. That's a 44 percent fall in one year, from Oct. 2007 to Oct. 2008.

What else happened in the last year? Three out of four very broad indicators headed UP, if you can believe that.

The value of private nonresidential construction put in place increased 12 percent in the 12 months leading up to August 2008.

New orders for manufactured goods (durable and nondurable), reported monthly, grew from $425.4 billion in Sept. 2007 to $444.4 billion in Aug. 2008, an increase of 4.5 percent.

New orders for durable goods, reported monthly, fell from $215.6 billion in Sept. 2007 two $207.6 billion in Aug. 2008, a decline of 3.7 percent.

Gross domestic product. The grand-daddy of them all, this is reported quarterly, and the latest data available is from 2Q2008. It grew 2.05 percent in the previous year, and that figure is adjusted for inflation.

Of course, if you get into sectors that are more reliant on consumer decisions, you can find areas that are decidedly ugly. Transportation equipment -- that's everything from small passenger cars to ships -- declined 16 percent from September 2007 to August 2008. Home-building permits declined 24 percent during the same period.

Still, none of this is nearly as bad as the stock market meltdown. There is good stuff out there, and it’s not that hard to find.

Larson note: Newspapers sell sensation, they push headlines. If you want to live your business life based off of 30 companies, if you want to make your financial decisions off of a few (large) financial banks, when your local bank is doing fine go ahead. While you are frozen in your footsteps I and others like me are surging forward building our companies not reacting and contracting them.

I refuse to participate in this recession!

Howard Larson
Larson & Associates
Telesales & Target Marketing Professionals for new account acquisition
Making good businesses great and great businesses even better

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