I thought it might be fun to go back a year ago trying to find egregiously wrong financial forecasts for the year 2008, soon to be put out of its misery. I didn’t find any. Just about everybody was predicting dire consequences for the year just ended. If someone thought that forecast was overly pessimistic, I couldn’t find any evidence of it. The prospects for a good financial 2009 are also rarer than BMW’s in a trailer park. The only issue for debate seems to be how long things will stay bad. It was a bit surprising to me to read in multiple sources that most end of the year forecasts had the beginning of the recession as having already started in December, 2007, even though the US government didn’t “officially” put us in one until eleven months later in November.
Mark Lanler’s New York Times article of December 10, 2008, seems to echo the cries of doom and gloom that dominate the media and the internet for 2009. (www.nytimes.com/2008/12/10/business/worldbusiness/10global.html) His opinion is particularly disturbing because he cites the lack of an obvious engine to drive a recovery. The latest “buzzword” seems to be infrastructure investment as a way out of the woods, but the term is thrown around so frequently that it becomes like the emperor’s new clothes, true because we all say it’s true and we all want it to be true.
The late December stock market mini-rallies can be attributed to “a dead cat bounce”. We at Blue Water Partners (www.bluewaterpartners.com) “borrowed” that line several years ago with little apology to the originator of the term. An unnamed Singapore broker cited in The Financial Times, coined the phrase after a precipitous market plunge on Monday was followed by a modest recovery on Tuesday. His rather macabre observation was “that even a dead cat will bounce if dropped hard enough from high enough.” (www.thelede.blogs.nytimes.com/2007/03/01)
The term never fails to bring a smile to our faces, though the sentiment is hardly worth smiling about. Our hopes for 2009 is that the year as a whole will not (in retrospect) be anything more than a dead cat bounce from the plunge of 2008. Money will, of course, be made in 2009. Money is always being made somewhere. Buyers are making acquisitions. It’s a good time to have your financial people on speed dial, especially those who know how to drive value.
By Myron Gushlak
