Exploring the difference between an economic rally and a recovery
At the beginning of May, one month after the Dow Jones industrial average and S&P notched their best quarter since 1998, we posited that the European elections could trigger the next phase of the global financial crisis. Since then - when most pundits were all kinds of bullish - a nasty slide wiped 20-25% from the market value of many financial and technology companies.
Last week we posed a question - when will the economy recover? - and offered that a genuine recovery ripe with Millennial-led human capital could only occur after we navigate the sovereign sequel to the first phase of the financial crisis. This week, global central banks pleaded their case.
China and Australia cut interest rates .25%, the European Central Bank extended concessions and promised "We're here for you!" and Federal Reserve officials, including Ben Bernanke, jawboned and postured into what's shaping up to be a contentious election stretch.
These words and gestures are Band-Aids on a broken bone. And while the stock market ripped higher earlier in the week, stocks fell too far too fast and many in the mainstream media, traditionally a contrary indicator, warned after-the-fact the world would end. Bear markets pave a path of maximum frustration; investors are pummeled at the top and savers get punished at the bottom.
There are no one-stop solutions and blanket answers; that would be too easy. A wise man once said where you stand is a function of where you sit, which is dependent on your time horizon and risk preference.
I maintain that when the dust is finally allowed to settle, generational opportunities will emerge; our goal is to get there in one piece while enjoying the journey along the way.
Todd Harrison is the author of "The Other Side of Wall Street" and the founder and CEO of Minyanville, an Emmy Award-winning financial media platform. Read him daily at www.minyanville.com.