In context of market DOW was trying to break 1000 in early eighties we are nearly 10 times higher. The gross profits in 98 from US markets are expected to be 110% of 81 market capitalization.
That is the kind of growth in economies we have seen with 'globalization'-- only average of 10 in a thousand people have access to 'internets' and work on line it is expected that this will grow ten times in five years, this growth would certainly require heavy IT investments.
I concede that forward projections can be two edged like 'Malthusian destruction' where it was thought that population would exceed food supplies. In my opinion 'road maps for future' have a common element of 'overdrive in-built pessimism' in them. It sells more. Like you have highlighted 'oils or gold' in 90's both were expected to land the world into ice age of recession not the kind of relative prosperity we see now. May be it was an argument to go long oil stocks. but I have found this argument was sponsored by gurus who expected global equity markets and profits to disappear completely as human kind becomes hostage to the sheiks. It was never to be the embargo of 70's changed the perception of consumers about oil, new technological discoveries now project more oil in reserves than it was ever thought in 80's. Oil at 120 was a pessimistic projection at 13 today it reflects how development won over pessimism. The gold at 700 was about failure of AG to contain inflation we are below 300 because commodities have lost the luster.
The fusion experiments I hope are not in far too distant to serve as a last nail in the coffin of unsustainable energy resources.
It is something in our human frame of mind that we like to concentrate too much on pessimist projections, the first two examples of oil and gold were highlighted to show that demand will outstrip supplies or inflation will lead us to commodity price rises. They were arguments favored by the 'pessimists' school of thought who always thought that some external factor will take the air out of these markets. You can easily find some species of this particular brand of pessimists even on SI-- rather we are littered with self styled 'destructive prophets' who were short this market at 4000.
The best sellers in 80's were books like 'Bankruptcy of America' by self styled gurus who practically used every argument on face of this earth to establish that hockey stick shaped trajectories of budget deficits will economically destroy US. Today we are in surplus exactly the opposite of what was being projected and bought by the public as conventional wisdom not in distant past but in late 80's. Buy `gold' and stash your cash in commodities was the wisdom being sold, the last but most important being get out of the markets. The story of mankind is about `forces of pessimism' arrayed against `forces of production' it has always been so that mother nature has helped the forces of development to empower the arguments of pessimism. The human cycle today is epitomizes that long struggle for survival.
In most of these projections of going forward we saw the error of pessimists overlooking the productivity gains, the technological advantage and global interconnectivity, the size of 'global economy' is 45 trillion $'s and not mere 12 trillion $'s back in late seventies, this many fold increase is simply incomprehensible to many of these pessimists. I also concede that ASEAN markets have really been battered but South Korea or Singapore or Hong Kong in 50's had a per capita income of less then 200 $'s today it is ten times higher, yes I think it would be simplistic and bordering 'short termism' to call this meltdown of ASEA as last sigh of ASEA. We will see and hear from ASEA a lot more, we will see it re-emerge from this crisis strong and better. It is 30's depression, malaise of Carter era,87 huge correction which brought agility and recuperative ability to US economy. Progress of any economy or product is based on `boon and bust' in case of NIC's when they are buying growth off the shelves it is particularly more important.
This IT revolution is not like 'Dutch tulips' or 'Tokyo prime land' expectations it is about 'globalization'. I look back at my own example back in 60's and even early seventies life across the board in regions I live has considerably improved so is their desire to inter-connect. Wintel or CSCO's or IT expenditure is going to free the world economy from the constraints of distance. Therefore in my opinion like I rejected the calls of Oil at 120 $ as slogans of fools and re-ignition of inflation in 1995 ( to reject the concept of gold at 700) I think that realistic goals of IT spending will happen is happening and it is altogether taking the mankind of a different trajectory of growth. The windfalls from the trajectory of this special kind of distance free growth are enormous. For me Microsoft (MSFT) Intel ( INTC) CISCO or ASND are catalysts of such a change
To compare and discount this growth with excessive optimism or pessimism of past in my opinion is not in order. As a parting argument I would only like you to look at the growth of WINTELCO-- the cap of these companies at 90 and now-- if by any standard this growth rate is to be maintained we are in for a decade of global affluence. Yes one thing I would accept we are `optimistic futurologists' we try to see where the real truth lies within certain set of arguments for economic development and try to devise a strategy. Thanks for your very pertinent remarks. |
