The past performance of the US Economy is no indication of future results. There is a 50-50 chance that this is good news.
As we move through this week and contemplate 2009, consider these axioms...
1. The catalyst necessary for change can come from multiple directions. A stock's catalyst for change can be internal or external. Change in the US Economy comes both from within *and* from everywhere else. (See Stock Casting)
2. Historical data is not useless, but it is never as simple as looking at past performance. If you look at world economies (in the same way you examine blue chip stocks), past volatility gives you some appreciation of future risk. When you invest in a troubled market or stock, you take the risk based on the hope of a large payout later. In many cases, the larger risk you take, the higher future payout. (See Efficient Market Canada)
3. 50-50 statements are always overstatements or understatements of fact, whether in weather forecasts, politics, or economics. (See dotCrime Manifesto). Will the US Auto Industry survive? I'd say there is a fifty-fifty chance.
4. Even though we can't predict the weather accurately beyond 2-3 days (and most times less) and even though our laws give us safe haven from the uncertainties of the macro economy, any advisor who tells you that "past performance is no indicator," gets the boot. What if your weather source said, "I have no indicator of future results"? (See the Confident Trader)
5. Look at your own life experience in 2008. Does this past year indicate to you what is in store for you in 2009? Are you certain? (See London Calling) Are you certain that the US Economy will be worse in 2008 than in 2009? I'm not.
More Future Results and Safe Harbor Statements as we approach the Time's Square countdown... (tomorrow's post - 10 Charts from the Past)
This blog entry includes statements that qualify as forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements about the following topics: expectations regarding future US Economic financial results, including GDP, interest rates, real estate valuations, consumer confidence, corporate earnings, US customer demand, US inventory levels, falling gasoline prices, acceptance of new market products, customer order patterns, factory utilization, CEO compensation, taxes, mortgage notes, US stock future dividends; ongoing proxy contests, and the nature of macro-economic, industry and market trends. Forward-looking statements are subject to certain risks and uncertainties that could cause actual US economic results to differ materially.(*)
(*) If you choose to add your comments below, you are covered by the Private Securities Litigation Reform Act of 1995