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Who We Are
Who We Are
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Is there such a thing as good debt? What do you suppose bad debt is? And
what kind do you have? Debt |
"America is not only big and rich, it is mysterious; and its capacity for the humorous or ironical concealment of its interests matches that of the legendary inscrutable Chinese."
These markets are often described, perhaps by habit, as something alive, breathing with its own momentum, moving in some sort of direction. But somewhere, the life blood of what is happening on Wall Street has thinned. And most wonder about the direction, as if understanding is all that is needed to profit.
Professor David Riesman wrote a book in 1950 that became the sociological handbook for direction. This scholarly work looked at population in relation to the way its people acted given certain technological advances. When technology was absent in the population, the people living during such a period became "tradition directed". It was easier for these people to rely on rules that had been passed down from generation to generation. There was a comfort zone in knowing what to expect, who was in charge, and what role each individual played in the day to day drama. During periods such as this, Dr. Riesman observed that the population stabilized, neither growing or declining.
As technological advances grew, populations who once were content with the known world, ventured inward in search of their own talents and contributions to society. These folks realized a certain pleasure and profit in their abilities. Scientific advances would be toiled over in the privacy of laboratories. Artists would become creators of incredible beauty and salvation would take on new meaning. But the quest for wealth and its companion fame would take the tradition directed society and turn it one its contented ear.
Dr. Riesman believed that these periods would result in population growth as folks were given opportunities for personal growth. These "inner directed" periods were sociologically important as people looked at themselves in relation to what they could offer society.
But growth can not be sustained forever. At some point populations level off, consumption of these new technologies begins to over take the ability to produce them. This lack of dynamic upheaval result in growing populations of peer groups that seek conformity. Gradually it became more about what was expected by the mainstream instead of what was innovative and daring. These folks, living in a declining population would become the "other directed."
The stock market, if it is believed to be a breathing organism, shouldn't be expected to react much differently that society as a whole. It has gone through a tradition directed period that gradually began to see innovation and change starting in the early sixties but never really gaining full momentum until three decades later. The comfort of trading ranges, price movements in sixteenths and eighths, and the relative stability of the American consumer to accept what business offered, led the markets to a tradition directed trading pattern. American society was making progress, but Wall Street was operating in its own secret world, content to be what it was.
Never assuming that there was some sort of defining moment, the overlapping of tradition directed and inner directed became most evident in the nineties. As technology continued to push the fabric of life in directions it had never seen before, the market reacted with remarkable growth. It was hard to ignore what was happening on Wall Street. For most of the population, the same one who was content to ignore the markets, the opportunity to take part in the wealth grab that seemed available to everyone, was irresistible. We began to see the market as a beast of burden, carrying us with it as it moved forward while we moved inward. We believed in our innate ability to pick winners, garner profits from those decisions and transform investing into what we considered to be an art form. Wealth was easily ours. Fame was handed out with every buy recommendation, and the quest for salvation became the need to retire early to we could enjoy the beauty of what our investments had bought us. For many, this became the all consuming passion in their lives. It was no less a crusade led by an inner voice that spoke to us the truth. The markets had become inner directed.
As more and more people sought to hear that siren call, the beast of burden slowed down under the weight of all of those dreamers. Too busy to see what was happening, we showed our collective surprise when the market turned on us, refusing to move forward. "The other directed person wants to be loved rather than esteemed," Dr Riesman wrote and with that notion, the markets crumbled. We had found the beauty in wealth and fame and technological advancement and we weren't totally satisfied.
So when should we expect the markets to revive itself from this tradition directed "Middle Ages"? How long we will be content to accept that things have changed on Wall Street? Will we need to wait until companies finish their parade before the court system? Will corporations need to readjust how they are perceived by the investor who feels increasingly isolated? Or will the individual become content to watch the world go by without paying any heed to the warnings?
If there is to be a "Financial Renaissance", a renewed quest for salvation, wealth and fame, it will come from the ashes of the market we are in now. It will take a major commitment by companies to offer to share the wealth and to be forthright in their disclosures. The mistrust in every number and statistic, every promise and profit warning, in every CEO's resignation, will all contribute to making the investor disinterested for quite awhile. And who can blame them.
The wait for the market to catch up to itself will come some time down the road. Not next quarter. Not even next year. Recovery will happen but won't be anything other than a return to tradition direction. The inner directed market needs some sort of catalyst to propel it forward. The fame that wealth brought it in the not so distant past came with harsh criticisms and legal wranglings. As we deal with our expectations of ourselves and our peer groups, the market is settling in for an overdue slumber.
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