‘Tis the season for retrospectives and predictions—here at MarketMinder and elsewhere too. Though the market is up and the economy is turning, disillusion runs deep. Some say the aughts were exactly that—a string of zeroes. And the tweens and teens will be little better.
It's enough to fill a thousand champagne flutes with tears. But investors shouldn't much care what the entire decade ahead holds. It's more important to ask: Is the current bull market sustainable for another year? We think so. As long as disenchantment prevails, folks will be forced to face a brighter reality—over and over again. It's the proverbial "wall of worry" being built brick by brick.
Take this year's holiday shopping season. Retail businesses expected little from shoppers. Dour retail sales forecasts included the Conference Board's expected 7% year-over-year decline. Turns out, things weren't so bad. The Commerce Department won't release numbers until mid-January, but preliminary private sector estimates show 3.6% holiday sales growth over last year. Not blockbuster (last year set a low bar)—but not too horrible either, and certainly a far sight better than what was expected.
But it's less about whether sales were blockbuster and more about businesses underestimating consumer appetites. In fact, spartan inventories had some retailers rushing to restock shelves, even as customers picked through the season's remains. Folks just didn't pinch pennies as expected. Holiday moviegoers swarmed theaters here and abroad. Last weekend's $278 million total box-office "take" in Canada and the US was the highest in "recent history." Globally, Avatar earned $617 million in its first 10 days—well on its way to becoming only the "fourth picture in history to top $1 billion worldwide." Meanwhile, alpine enthusiasts hit expensive resorts and bookworms went electronic. Amazon boasted selling enough Blu-ray players to stretch 27 miles and iPod Touch's to supply a continuous soundtrack into the 25th century.
None of this smacks of zero.
As demand continues outstripping supply in 2010, firms will peek out from under their shells. That should spur rapid inventory restocking and bolster business investment generally—all that on top of today's already improving economic climate.
So let's toast 2010's growth prospects—and hold the tears for another year.