The last missive?
November 7, 2001
As I write this, all sectors of the government, including the Fed, and the financial powers that be, have finally accepted the reality that we have a recessionary economy. I take no satisfaction in the fact that I have been warning of just such a scenario all year, but I do hope I was able to help some of you to prepare for this reality.
Ironically, I am also cognizant of the fact that every forecaster has his/her day and then spends most of their time being dead-wrong or being very right, too late. So, I am quitting while I am ahead: Now that we have settled into recession, I find I have fewer tools to help you COPE with this new reality than I have to WARN you of its coming. Actually, calling this recession was not hard at all. All one had to do was to critically examine the reasons for all the rampant optimism as the stock market bubble burst, and the fundamental flaws in the rosy arguments showed you the path to recession (and more stock market losses as well). And this analysis is exactly what you should do when at some time in the future, pessimism will reign supreme and no one will see any hope. Since I think we are in for a prolonged period of economic stagnation (or at best slow economic growth), it should take some time before we see such entrenched negativity.
In the meantime, I may occasionally send articles of interest, but I don't anticipate the need to flag any big warnings or clarion calls to action. However, I do worry more about whether we truly are falling down a path similar to recession-trapped Japan. The fact that most "experts" are completely unwilling to consider the similarities validates my worries and gives me cause for concern even more. For example, apparently, the Fed has already held briefings with the Treasury department on how to deal with a zero-interest rate economy. This is finally a recognition that we just might be in for a period of longer stagnation than everyone might think right now.
If you are an investor, all the advice I have given to this point remains valid. While I will not be sending out these notes, I am always willing to field questions and drop my opinion when asked.
If you are now coping with recession, don't forget that the government is spending tens of billions of dollars to stimulate the economy, and you should take full advantage of any benefits and/or programs they create.
So, until whenever, don't forget that there is always opportunity somewhere, but also be careful out there!!!