Hi Ken:
Great to hear from you. I have been away for the past 3 weeks half way around the world on the other side of the planet and one thing I am most certain of is the fact that we grant so many things here in the US as given. And that indeed is regretful as it most often causes us not to appreciate what we have here in this great country. I respectfully strongly disagree with your notion of our economy going to hell and the severe gloom and doom scenario you are predicting. My reasons are based on some philosophical beliefs as well as some factual realities of our economy.
From a philosophical standpoint I am an optimist by nature and strongly believe the world is always moving forward for the better. Certainly there will be bumps on the road but nevertheless we are moving forward for the better always all the time. Our economy here in the US is based on innovation and self-confident of individuals (mostly my generation of 35-45) who are driving it. I was in Iran after almost 23 years of not being there. It is beyond me to express how sad it is to see so many - so many - talented smart young people who are living there without having the opportunity to be responsible for their own economy and to move the country forward. Their lives are simply being wasted. I can most definitely claim that each of these smart young people can handle 5 to 10 of their counter parts here in the US and other free democratic societies when it comes to ambitions and having the capability to achieve those ambitions. It is regretful – truly regretful – that because of a backward suppressed social-economic system the lives of this force is being wasted. It is only through comparison that one can truly realize the so many blessings we have in the US. And yet most often we do not realize it and take them for granted and worse turn around and view the future and the world in a rather pessimistic manner.
And I submit to you because of the blessings we have here in the US and the self-confident of the people who are driving the economy through innovations and achievement of high ambitions our economy will not go to hell as portrayed by so many. We are not in the 1929's, or the 1970's or heck even the 1980's. If 1970's economy could survive and pull itself out of a horrible recession, the 2000's economy will not even get close to the recession territory.
As for factual realities, our economy - and in fact the world economy - is based on technology. High productivity is the order of business. Unemployment will remain low, and despite all the noise about massive lay-offs, jobs are created and those who are laid off are absorbed very quickly to the technology based economy. When people have jobs, they also have money. And when they have money they either invest it or save it, at the same time as spending it. Spending is based on economic confidence of one's financial well being. It is true that people do tend to become economically conservative when their investments do not perform well and tend not to spend, but because of the optimistic psychological mentality of my generation (who again is responsible for driving this economy) the financial conservatism of not spending is very much short lived. And as for their investments are concerned, we now have the largest amount of cash sitting on the side to get into the equities. It is only a matter of time (and not too long from now).
I therefore submit to you with decreasing interest rates, some form of tax cut (although I personally am totally against any tax cuts and rather government pay off the debt or take care of the social security first), and inflation continue being so low (thanks to the high productivity nature of our technology dirven open economy), and continued low unemployment, we are about to see the birth of the biggest bull market of the history beginning toward second half of this year (and starting its foundation in early April).
And yes I again say we are simply in a market correction (as severe as it maybe), but while this correction is taking place the biggest bull market of the Wall Street is being born. And I still say Nasdaq at 3000-3500 by the end of 2001 and even go further and predict a Nasdaq of 5200-5500 by the end of 2002 through middle of 2003. Who knows I may end up eating my own words, but as someone who believes in the capabilities of my generation who are responsible for driving this economy and as an optimist I stand by my convictions. Whether I am correct or not is of course to be seen.
Best Regards to you and your family,
- Addi |
