It has become the main topic of conversation around the country from the evening dinner table to idle chatter at cocktail parties. It has become the conversation-du-jour of the media—from the evening news to talk radio to fulltime financial networks—all devoted to the same topic.
I'm referring to the American stock market and its meteoric rise this year—more than any other year in memory.
It has become the main topic of conversation in corporate boardrooms as CEOs and their directors plot takeover strategies using their own stock as currency. Management and employees ruminate over it as they evaluate their own stock options or the net worth of their 401(k) plans.
Everything is "Up" in Corporate America
The whole country is knee-deep in the stock market. Never before have so many Americans participated in or had the majority of their net worth made up of stocks or stock mutual funds. Stocks aren't just for the likes of Warren Buffet or corporate CEO's. The stock market has come to main street. Today, even the UPS deliveryman owns a piece of corporate America.
This love affair with stocks has been propagated by stories of fabulous wealth and consecutive years of double-digit returns. Spinmasters from Wall Street to Washington spell out the new theories behind the market's parabolic rise in the 1990's.
America is undergoing a new paradigm brought on by a technological revolution that is transitioning the country from the Industrial Age to the Information Age. American corporations are running lean and mean as technology transforms our economy. To most, the U.S. economy has become a "miracle." While developed nations in Europe and Asia are mired in recession, and the developing world is caught up in strife and survival, America's economy and stock market keep growing at unprecedented levels. We've become the envy of the world.
So What's The Story?
The story of our country's economic growth, stock market's rise, and military prowess only reinforce the myth that we have become the world's only superpower. Today's economic statistics seem to back up this story. Everyone who wants a job in America can find one. The unemployment rate is at the lowest in nearly three decades. Interest rates are at levels not seen since the late 60's. The inflation monster has finally been tamed. The stock market has risen, non-stop, for 18 years. For the last five years, those gains have been double-digit. America seems to have entered a golden age of prosperity.
The astonishing growth of our economy and the almost magical rise of the stock market is creating wealth as never before seen in the history of the world. The 20th Century has become "The American Century."
Not only has America become the wealthiest nation on earth, we have also become the mightiest military power in the history of the world. We were the deciding factor in helping to win World War I and II. We also won the Cold War and the Gulf War. Like the British Empire before us, the next century is predicted to be dominated by America as well.
"We Can Only Go Higher!"
And yet, there is another side to this miracle, one that you won't see on the evening news, read in local papers, or come across in the myriad financial publications and books that hail the new paradigm or economic miracle. It is a topic I will examine in depth in future Perspectives.
The truth of the matter is ... we live in a bubble economy.
In my opinion, this bubble applies to our country's economic growth as well as the incredible rise of our stock market. This truth is a story America's citizen-investors hear very little about. It is not the story researched and told by America's media. In this country, there are only a few cautionary men and women who are discussing it.
The real story is being told overseas. The foreign press and major foreign powerhouses express concern over America's bubble economy and frothy stock market. They fret over it. Why? Because what happens here in the states, impacts their markets. To me, this is a story of sharp contrasts, whereby we see that the American media is blind and euphoric; while overseas the foreign press is worried.
In subsequent articles, I will examine this American miracle from several perspectives.
