This is a quotation from FDR’s first inaugural address when the country was in the middle of a severe depression. Obviously, we are not currently seeing any serious economic stress. But rather, we are looking at a very strong economy and a strong stock market, generally just a few, single digit percentage points from all-time highs.
Unemployment is at or near historic lows, there are more available jobs than job seekers, inflation is moderate and economic growth has been running above 3% in recent months. Never-the-less, the usual suspects are issuing warnings of imminent economic and market trouble.
All of this creates a dilemma for investors on what to believe; the actual, but inherently current rather than predictive, economic data, or the portenders of doom, many of whom have predicted 10 of the last 2 market downturns.
Obviously, the economy and the markets are not going to go up without some interruption. At some time, there is almost certain to be another recession and considerable market stress, although the long term trend is likely to remain positive. Investors would be well advised to carefully consider the available data and make decisions based on economic reality rather than emotions or fear.
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA
