Two months ago, if BP's (NYSE: BP ) former CEO Tony Hayward so much as sneezed, it was practically front-page news. Anything even slightly related to the BP oil spill was covered in meticulous detail ad nauseum. The media just couldn't get enough of it.
Then came good news: The leak was finally capped. Yet the media barely yawned. Interest has almost vanished. Same with the Iraq war. You'll be forgiven for not knowing that the last combat troops just left Iraq (although plenty of non-combat troops remain). It was barely passing news.
Fear sells. Good news rarely does. That's the unfortunate truth about our media. So I asked a few of our analysts to share the best, most optimistic news that the media's not reporting on. Here's what they had to say.
Alex Dumortier, Fool contributor: Capitalism works -- although that should hardly be news to anybody. Furthermore, as Anatole Kaletsky delineates in his new book, Capitalism 4.0, it's an extremely adaptable form of economic organization. Although many members of the political class and the wider mediocracy have been busy delivering its eulogy, the reports of capitalism's death were an exaggeration. Just ask the Chinese -- they know full well it works.
Yes, there are some dysfunctions associated with financial capitalism, but this is not a new phenomenon. Our society has encountered periods of serious crisis before, some of which were painful and protracted, but we got through them and went on to achieve higher levels of wealth and standard of living.
I continue to believe that the effects of this crisis will be felt for years to come, and I don't think that stocks are wildly attractive at current levels. However, as U.S. households repair their balance sheets, and the pressure mounts on the U.S. government to do the same, the credit crisis could ultimately sow the seeds of more stable and sustainable economic growth (albeit at lower rates than we'd grown accustomed to). This weekend's decision by international banking regulators to require banks such as Bank of America (NYSE: BAC ) and Wells Fargo (NYSE: WFC ) to hold elevated levels of capital -- albeit with a drawn-out implementation calendar -- is a good start.
Nick Nejad, Fool contributor: On the last day of my International Trade class, UC Berkeley Professor David Roland-Holst shared with us a powerful idea: Just a few percentage points of world growth could cause some markets to double.
Don't believe me? Let's say 1% of the world can afford a Super-Duper Motley Fool Blender (while supplies last). Out of 6 billion people, that means a target market of 60 million. But if world GDP grows by 7% per year for four years, how many people can afford our blenders now?
Answer: 720 million. The market has grown 12-fold, assuming income is normally distributed. OK, world GDP growth may not actually be 7%. But you get the point. Small shifts on a bell curve can bring a tremendous wave of people into a market.
I like to put a deeper meaning to that. An executive recently gave a talk about how only 1% of Indians can afford to buy insurance (out of a population of 1.1 billion). That placed a tremendous hardship on their lives. They were always one flood or fire away from losing it all. In a few years, I'd like to think that several times as many Indians may be protected from that risk.
What makes me optimistic about the coming few years? The demand is set to soar for so many great and useful products. With any luck, exporters like General Electric will see their orders go up, and Americans will be hired to fulfill all that new demand.
Matt Koppenheffer, Fool contributor: One of the notable surprises for me over the past couple weeks was the strength in sales at major retailers.
Given all of the wailing about how consumers make up 70% of the economy, and that they're probably never, ever, ever going to buy anything at all ever again, you'd think that healthy sales numbers from retailers would get plenty of air time. Not so. In fact, had I not been tuned in to the Motley Fool Money radio show, I might have missed it altogether.
But I'm darn glad I didn't, because the numbers were well worth seeing -- same-store sales growth was 6.3% at Nordstrom, 2.3% at J.C. Penney (NYSE: JCP ) , and a whopping 10% at Limited Brands (NYSE: LTD ) . Heck, even beleaguered Abercrombie & Fitch (NYSE: ANF ) saw positive sales momentum.
Morgan Housel, Fool contributor: Two points. First, history is on our side in many ways. Events move in cycles. Good times tend to follow bad times, and vice versa. We just had a lost decade in stocks, which has indeed happened before. But even in the most wretched downturns, another consecutive decade of lost returns is extremely rare. Odds that the coming 10 years will be vibrant are much, much greater today than they were 10 years ago. That's what history shows.
Second, the job market might not be as bad as some make it out to be. The current monthly job-loss figures we hear about typically come from the Establishment Survey, which polls businesses on their hiring/firing activities. Another statistic is the Housing Survey, which polls households on their employment status. The latter survey's findings are pretty upbeat: The private sector has added a hefty 1.8 million jobs year to date, versus the stupor that shows up in the Establishment Survey. No one knows which survey is truly accurate -- actually, both are merely estimates -- but our overreliance on the Establishment Survey is probably overdone.
Any news of your own? Chime in in the comment section below.
RSS Headlines
Fool UK