Is Our Economy Really That Good?

The stock market went up sharply recently. Lots of people,  especially my friends are all talking about it and thinking about putting new money in.  For me, I just don’t believe the recovery will happen in such a rapid way. Yes, some companies do have good earnings. Lots of them report earnings with dropped revenue and profit however exceeded expectations, people liked it and price went up. Come on, that is not the whole story.

Why do I say that?  Lots of companies cut expenses, laid off working force and/or sold some assets. That will affect balance sheet, so the profit for this quarter seems much better. However that won’t last long. With 9.5% workers looking for a job, I really don’t believe the economy will have a ‘V’ type reversal.  14-15 million unemployed people are looking for a job.  God, how many people are in US? that is a big number. The economy will never recover fully without enough working people.

The consumer is the key to our economy. If lots of people don’t have a job and income,  do you think they will continue to  spend their savings? If people spend less, what will happen to companies that target the consumer? Then what will happen to companies providing service to those companies? etc…

Look into house market, people did see increased transactions. However it came with a drop in price which offset all.

My thought is always simple. Everybody, especially normal people want to buy stock. Don’t do it.  If they want to sell, hold it or even buy more. It sounds crazy, but it works.