Today’s title may seem odd in the throes of a recession, yet it’s true. True economic strength is a function of an economy’s productivity. The truth is; the U.S. economy is more productive today than it’s ever been and it gets more productive each and every day. This is why I believe that comparisons to our current economy and the depression of 1929 are so ludicrous. Simply, reflect on how much more advanced we are today than we were 80 years ago. Literally every good and service needed by mankind can be produced and delivered more prolifically and efficiently than back then. Whether it’s our most basic; food, clothing, shelter and health care, to more esoteric entertainment and information there is more available than ever before.
According to Wikipedia “The economy is the realized social system of production, exchange, distribution, and consumption of goods and services of a country or other area.” The forces of supply and demand that keep the economy always moving to equilibrium are natural forces at work and should not be confused with economic strength or weakness. These natural forces correct imbalances when and as they occur and the economy marches on. Human consumption adjusts but rarely differs much from generation to generation. We all wake up hungry every day. I am not suggesting that the adjustment process is always easy, because it’s often not. Today is one of those difficult times. I am suggesting that we need to navigate troubled waters with a reasoned mind and perspective. Because of our true economic strength we must logically remain faithful that we will survive and prosper.
The author manages portfolios owning GOOG, EBAY, UTX, and AKAM This blog is founded on the principle that successful investing requires optimism built upon sound fundamentals. Productivity is perhaps the soundest fundamental of all. Optimism, I believe, is the most intelligent perspective to hold. For it is through hope and faith that our future is forged. There is a terrific website that I recommend to all that are curious about the future: www.KurzweilAI.net. If you are pessimistic regarding the future, don’t go there, it may ruin your mood. What you are looking for you will surely find. Look for problems and there will be many that show up. Look for solutions and your problems will be dissolved. As the old saying goes “if you are not part of the solution, you are part of the problem.” Be a solver!
