January 5, 2010

Sizing Up Twenty-Ten

Happy New Year!

I grew up in the Snake River Breaks northwest of Boise. In tiny Huntington, where I quarterbacked the eight-man high-school football team, a guy ahead of me several years achieved local fame at middle linebacker for the Boise State Broncos. BSU was I-AA back then, in the Big Sky league. Last night, it was great seeing the Broncos go 14-0, beating undefeated and 4th-ranked TCU in the Fiesta Bowl. The little big sky school has come a long way.

Speaking of a long way, here we are in Twenty Ten. What to expect this year? Lots of fun, of course! For those of us hovering about the gilded IR chair, it’ll be the year you create job security for yourself by knowing your market structure. The moment you start chattering about risk-management resets, you might see the eyes of execs glazing over – but they’ll be happy to pay you to know what you’re talking about! I’d say that’s worth looking forward to.

And will we here at The Map shut up about money supply already? Nope. You’ll hear more about monetary policy, because it’s the entire – yes entire – reason that neither the IR industry nor the global economy is really, in fact, growing. You cannot claim to have a free market and at the same time manage market outcomes with monetary policy. Nobody knows the value of things, then, and that’s really bad if you’re trying to create value.

Plus, Nature constantly changes. Capitalism is profitable adaptation to change. When the whole world is fixated on keeping some unfortunate event from ever happening again – trying to stop change – we are defying not only Nature, but the very thing that fosters prosperity and a vibrant IR profession – adapting to change.

As to what happens in the markets, nobody can predict the future. Money will continue to value your stock on the basis of use, with risk managers more powerful, investors less powerful, and speculators reacting to both. We track the behavior of money because IR folks now must be purveyors of knowledge, not just voices to investors. Knowing what’s happening, even if you can’t change it, is critical to IR value.

Differing ways money uses stocks is likely to result in continued broad equity appreciation, perhaps beyond 11,000 on the Dow. But like a bungee cord, markets stretched by elastic money supplies will contract. Period. Equity markets do still reflect the value of created things. Even if risk managers continuously tweak settings and speculators arbitrage movements. If we’re not creating things, and we’re gumming the gears of adaptive change with rules and hoops and do’s and don’ts in a bid to protect ourselves from the scary unknown, our equity markets will come to reflect moribund inertia.

Moribund Inertia isn’t even a good name for a rock band. So let’s change it.

Share this article:

More posts

dreamstime m 10641082
July 10, 2024

It’s worth stopping whatever you’re doing and observing what’s occurring on the planet.  In South Africa, the African National Congress is out for the first...

dreamstime m 84244231
July 3, 2024

There’s a moat between haves and have-nots in the stock market.  The S&P 500 Equal Weight Index that treats the 500 components the same is...

dreamstime m 27911598
June 26, 2024

Why are the Nasdaq and the Dow Jones Industrial Average diverging wildly?  It might resolve in the next few days.  But it’s not small. Back...

dreamstime m 105330423
June 19, 2024

One of our customers at EDGE calculated that 82% of Demand in the S&P 500 is from three stocks (NVDA – now the largest –...

June 12, 2024

High-frequency traders are data-dependent. The Federal Reserve ought not be.  I’ll explain. The U.S. central bank today concludes its open-market (FOMC) meeting. Jay Powell speaks. ...

dreamstime m 4536788
June 5, 2024

Somebody pulled a pin and dropped a grenade in the stock market and nobody noticed. Let me explain: Now, there were explanations. Index options on...