A couple of my stockbroker buddies called yesterday, both of them worried the stock market is crashing.
I understand. Customers see their net worth declining, they become frightened and call their brokers. The fear rubs off. The brokers start looking for reassurance, too.
And they know who to call. Me. Forever the optimist, I am always ready to cite the statistics that give them hope. Best second-quarter GDP growth in years. Historically low unemplyment. Low interest rates. Strong worldwide demand for U.S. products thanks to a cheap dollar. And here's one nobody's talking about on television: Despite the current housing slump and the mini-crisis over sub-prime mortgages, more than 98% of all mortgage payments are being paid on time.
Does that sound like the end of the world to you? Of course not. As usual, the current flap revolves around uncertainty. How bad will the housing slump get? How many hedge funds will fail because they took incredible risks trying to carve out a quick profit on derivitive interest-rate products? Will any major banks find themselves sinking because of too many loans in one particular segment of the economy? That happened in housing before. It also happened with oil, and before that, corporate conglomerates that were acquiring firms willy nilly (with borrowed money).
This ebb and flow of winners and losers is the essence of our economy's greatness. Smart is rewarded, dumb is thrashed back into the trash. There are always reasons to be frightened. And the stock market could go a lot lower. But in the long run, betting against the U.S. economy is the surest way I know to lose money.
Hang tough, America. The sky is not falling.