Trends

Humor me in a brief departure from the normal topic of my blog.

Much has been said about the state of the global economy. Every industry has felt the impact. I know people who have lost their jobs, I know people who are worried about their current job, and I've had to inform people that their role on my team was no longer available. Layoffs even delayed my overseas assignment (rough day).

The economy is a favorite topic for many I meet. It's at the forefront of decisions we make every day at my company - what projects do we do, is it safe to spend more money, should we renegotiate contracts. As the resident American, I'm often asked for my opinion on the banking crisis. Everyone is curious.

Let me go on record with a few things:

1) The recession is over
2) The media caused it
3) We will not "recover", we will "rebuild"

To borrow a technical term, the economy has reset to "last known good". Purchasing, market values, housing prices have declined and will not rebound to the heights of 2007. They have dropped to their true value, and will begin to grow at a standard rate of return from here.

I'm sure you're asking: How do you know? What do you know that economists don't? Well, nothing, really. Many economists are saying the same thing. In fact, at the Society for Information Management meeting I attended in November of 2008, our speaker for the evening more or less said what I am echoing here: media caused the recession, we were in it then, it would recover by summer of 2009 and growth would be normal by 2010. It's more about who I listen to.

Here is why I believe it is over and we are now moving forward:

1) In March, I sent an email to several of you indicating the economy was recovering because the Baltic Dry Index was climbing again. The below chart indicates that trend has continued.

2) Several other stocks - key stocks in our economy - are showing the same trend (note the upward trend starting in March). Look at nearly any major stock and you will see the same trend line (I reviewed about 40).

3) The media believes it. The media caused the recession by reporting doom and gloom and convincing shoppers to stop shopping. The media is now reporting "signs of recovery", which is increasing consumer confidence.

4) Companies are hiring. I've received several emails this week from recruiters I know asking if I know anyone who would fit the positions they are seeking. This hasn't happened to me in nearly a year. Contract labor is the first to go (expendable expense) and the first to return (companies are shy to make a commitment until they know it is sustainable).

The economy has recovered.

One last thing. I recently have bet heavily on several stocks- some as recently as this week. Here are the key things I looked for:

1) Trending upwards
2) Giants in their industry
3) Current price less than half of their 52 week high

For those interested, here is where I have heavily invested my money:

Alcoa (AA)
Conoco Phillips (COP)
Monsanto (MON)
Suncor Energy (SU)
Weatherford International (WFT
Bunge Limited (BG)
Builders First (BLDR)
General Electric (GE)
Freeport McMoRan(FCX) - this one I wish I had bought at $15 in Dec. instead of $40 in Apr. (price at this writing is $60)
American International (AIG) - a gamble, I'm aware, but they are dirt cheap
Wells Fargo (WFC)