08/31/10 Laguna Beach, California – The market giveth and the market taketh away.
Last Friday, the Dow Jones industrial Average gaveth 165 points. Yesterday, the Dow tooketh 141 points away. What should we investors learneth from this occurrence?
Should we trust that the economy is recovering, as the politicians pretend to believe? Or should we distrust that the economy is recovering, as most of the rest of us believe?
Let the reader decide, but before deciding, let the reader consider that almost every indicator of US economic vitality is showing a complete lack thereof. For example, the Conference Board’s Consumer Confidence Index, which declined sharply in June and modestly in July, is likely to have dipped further in August. By the time you read this column the results will be known.
The Consumer Confidence Index now stands at 50.4, which is down from 54.3 in June. But more tellingly, the Expectations Index has dropped to 66.6 from 72.7 in June. A lower reading seems likely for August. And this is just one of the many indications that an economic malaise is sweeping across the 50 States.
But even if this particular index stays where it is, or even registers a modest increase, the general outlook remains grim. As a nation, we’ve got too much debt, too little productive enterprise, too much regulatory oppression and too little entrepreneurial incentive. And yet…and yet…we Americans still find a way to make a buck. We still find a way to excel in certain ventures.
One of the ventures in which we excel best is agriculture. We know how to grow stuff…and we grow lots of it. Forward-looking investors should bear this thought in mind.
Eric Fry
for The Daily Reckoning
Eric Fry
Eric J. Fry, Agora Financial’s Editorial Director, has been a specialist in international equities for nearly two decades. He was a professional portfolio manager for more than 10 years, specializing in international investment strategies and short-selling. Following his successes in professional money management, Mr. Fry joined the Wall Street-based publishing operations of James Grant, editor of the prestigious Grant's Interest Rate Observer. Working alongside Grant, Mr. Fry produced Grant's International and Apogee Research — institutional research products dedicated to international investment opportunities and short selling.
Mr. Fry subsequently joined Agora Inc., as Editorial Director. In this role, Mr. Fry supervises the editorial and research processes of numerous investment letters and services. Mr. Fry also publishes investment insights and commentary under his own byline as Editor of The Daily Reckoning. Mr. Fry authored the first comprehensive guide to investing internationally with American Depository Receipts. His views and investment insights have appeared in numerous publications including Time, Barron's, Wall Street Journal, International Herald Tribune, Business Week, USA Today, Los Angeles Times and Money.
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