Market got you down? Don’t worry, the fundamentals are good
By Bill Settlemyer
President and CEO, Setcom Media
It’s been quite a roller coaster ride in the stock markets recently. But rest easy, I can take the worry out of it for you because I know what the future holds: The markets will go up. Then down. Then up. Then down.
That’s all you need to know, except for one more thing: Over the long haul, it’s almost certain that stocks will rise, because stocks are ultimately based on the value of the underlying businesses they represent, and businesses are relentlessly focused on growing the bottom line.
Take our company as an example: We launched the Business Journal in 1995. Although our revenue grew every single year, we consistently lost money during the first five years as we invested in building the infrastructure needed to execute our business model successfully.
It wasn’t an easy time emotionally or financially. I still have a New Yorker cartoon I saved from that period: Two down-and-out guys in business suits are sitting on a city sidewalk leaning against a wall and sharing a bottle of booze. One says to the other, “The thing that keeps me going is that the fundamentals are good.”
And that’s really what kept me going. From the start, our objective was to build a sound, well-managed business that would deliver something of value to the business community.
That task never ends, but we keep getting better at it and the bottom line reflects our success and persistence.
Economies on the move
One of the pleasures of my role as owner of the region’s business newspaper is to look around and observe how many other area businesses are maturing and expanding their market reach.
There are many signs of success: The growth of the area’s leading restaurant and hotel groups into other cities and states; the blockbuster $700 million sale of Automated Trading Desk to Citigroup; the continuing success of other high-tech movers like Blackbaud and Benefitfocus.com. And every where you look, there are a multitude of entrepreneurial initiatives by area companies of all different sizes.
In sum, the Charleston region is on the move. The fundamentals aren’t just good, they’re really good.
Statewide, the picture’s not so clear as the economy continues to work through the transition from the state’s traditional manufacturing base to an economy that relies on new business models that can work in today’s hypercompetitive global economy. But the good news is that a lot of people have been collaborating all over the state to build a solid foundation for this vital transition.
The growing ties between the state’s research universities and public and private economic development initiatives are one example of such progress.
Another is the focus of key political leaders on the importance of intelligent public policy and spending measures that support economic growth. As always, the struggle will continue to improve K-12 education and address other issues like work force development, the health of our population and rural and urban poverty. But at least we’re asking the right questions and actively looking for solutions.
The rinse cycle
Turning back to trends in the national economy, optimism must be tempered with realism about current conditions. The housing slump, the subprime mortgage meltdown and the tightening of the credit markets that have powered a massive wave of private equity deals are all cause for concern.
Could you, like me, see the housing bust coming from 1,000 miles away? Wasn’t there a hint in the condo-flipping frenzy and the crazy financing going on in the subprime lending market?
How different was it from the tech stock run-up seven years ago, when companies with sock puppets as spokespersons could go public and make millions for their investors without showing the slightest evidence of a viable business model?
Overheated markets eventually fall back to earth, and the housing market is no exception.
Yet we all know that housing is vital to everyone.
Right now we’re in what Warren Buffett likes to call “the rinse cycle.” But with patience and fortitude we’ll get through it. The housing market will right itself and return to a healthy condition that can be sustained for many years.
Produce more, consume less?
In the final analysis, I wonder if part of the problem is our obsession with conspicuous consumption.
Economists and business news organizations keep a watchful eye on the American consumer because the performance of our economy is so dependent on what seems like a constant buying frenzy.
Three decades ago my wife and I lived in Germany while I was serving in the U.S. Army.
When we returned to the U.S., we were shocked by the feeling of being surrounded on every side by a relentless pressure to buy stuff.
According to friends who just returned from an extended stay in England, things haven’t changed.
It’s a whole different mindset, and you have to live outside the U.S. for some period of time to understand how profoundly this affects our outlook on life.
So I wonder if it would make sense to “dial back” our passion for consumption just a bit and focus more on applying our skills and talents to the delivery of valuable goods and services to others? I’m not saying we should abandon all passion for consumption, but maybe a little discipline and self-restraint wouldn’t hurt.
This shift in attitude and behavior might produce substantial benefits. If we weren’t so overextended financially and loaded down with debt, we’d sleep better and probably work more productively.
The combination of those two elements alone could help achieve more balance in our lives and reduce stress.
The same principles apply on a national scale as well as individually. It really comes down to just living our lives and managing our businesses and careers in a prudent and sensible way.
A little common sense and restraint could go a long way toward building the foundation for a better life and a stronger America.
Of course, you won’t hear this pitch in TV infomercials, and I’m not even going to charge “only $19.95!” Have a nice day, and don’t worry, the fundamentals are still good.
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