convergence to the mean is a strong effect in ordinary times
we do NOT live in ordinary times
I totally disagree with the pundits and talking heads that the current divergence is in imminent need of correction, or that such correction is imminent... they seem to me to be dictating against the trend backed by reality
we are in the midst of an historic unprecedented buildup of new technology with fiberoptic, wireless, cable, advanced semiconductor (all the Gilder List themes)
we are also in the midst of an historic acceleration in active replacement of workers with productive systems... this replacement sidesteps the worker shortage issue... e.g. gas station pump attendants, tech support for hardware/software, credit card/bank customer service, computer system support, automatic teller machines, etc
then you have the many new virtual companies that do not use (waste) brick & mortar... a friend of mine from Digital days works for one and loves it... very efficient business model
the combination of cutting edge new and accelerated enhanced old technology is transforming the entire economy... add to the mix the emergence of the internet as an efficient mechanism for the exchange of information and process of ordering... lastly, bring down the communist system, thereby infusing a billion or three new low level laborers into the system, and poof, you have the new paradigm
I pity any investor, economist, forecaster, equity strategist, who fails to grasp the new paradigm
those who miss this paradigm shift are destined to take a step down in the food chain, and they deserve the demotion
I expect the divergence from the mean to continue and widen over the next couple years... I would use the word "worsen" except that I attach no value judgment to the phenomenon... it is the reality... old industries that do not grasp new technology will be left in the dust, and many many companies don't get it yet... they are the graybeard old farts, a dime a dozen... e.g. a friend's old employer W.R.Grace which is shrinking into nothing
bring on the divergence... I am banking on it !!!
/ Jim Willie |
