Just read Bill Gross’ latest commentary on the “New Normal” economy (http://www.allianzinvestors.com/commentary/mgr_billGross09012009.jsp) and I’m a bit conflicted.  I agree with him that we’re in for a period of slower growth.  And I agree with most of his financial recommendations.  But I struggle with his overly pessimistic view of the future.  Maybe because he’s a – no THE – bond guy and I’m just your average schmuck.  But I like to think its more than that.

I’m a technology guy.  Always have been.  But not your typical technology guy.  I’m not a geek.  But enough of a technology guy that I feel embarrassed when a friend asks me to fix their computer and I’m unable to do so.  As they say, I know enough to be dangerous.  My excuse is that I’m a “big picture” guy.  Which leads me to why I’m less pessimistic than Bill Gross.

We haven’t seen the end of the technology revolution.  Mobile technology is still in its infancy.  The Internet is still in its infancy.  Wireless technology is still in its infancy.  And nanotechnology is very much in its infancy.  We may not be in the early innings of a nine inning game but the starting pitcher is still out there.  There’s still plenty of technology driven innovation and growth in our future.

The other thing that I believe (and these are beliefs so don’t bet your retirement on me) is that globalization is not done.  You think the Brazilians, Indians, Chinese, etc. are prepared to go backwards now that they’ve tasted the fruits of rapid economic growth?   And how many other countries are sitting on the sidelines waiting to get into the game?  Who’s going to pick up their toys now and say they don’t want to play anymore?  This is no time to be myopic so don’t get caught up in it!

So I tend to be more optimistic than Bill Gross.  I hope I’m not wrong because the alternative is not slow growth but global discord and conflict.  Yes, the U.S. might be in for a period of slower growth in the near term but as long as we don’t lose our cool we will continue to benefit from an expanding global economy and the fruits of the ongoing technology revolution.

 Bill’s focus, like any good bond guy, is on the flow of money and the end of the easy money era.  And no doubt less easy money will put a damper on growth.  But if the “New Normal” means the end of Wall Street inspired financial engineering and a return to growth driven by real gains in productivity and an ever expanding global middle class then call me a fan of it.  Maybe we should just call it plain old “Normal.”

[I have to give a shout out to good friend Polly Goldstein who sent me a great article – via my mother Polly Eriksen – by Thomas Friedman (http://www.nytimes.com/2009/09/20/opinion/20friedman.html?_r=1&emc=eta1).  He really hit the nail on the head with regards to our politicians.  Their motto should be: “No hard decisions, please, we’re American politicians.”]


Paula gave me the idea for this post when she told me that Dr. Oz (of “Highway to Health” show fame) said that cirhossis of the liver is caused more by food than alcohol.  Wow!  And all these years I’ve been curtailing my alcohol consumption for nothing!  (No comment from the peanut gallery.)

Truth be known I’ve always felt we have been too quick to ascribe our health woes to our sins (alcohol, smoking, and ???).  Do you really think a beer or a cigarette is worse for you than a Twinkie??  It just goes to show that the food lobby is stronger than the tobacco and booze lobbies.

Hey, don’t get me wrong, I’m not promoting tobacco and alcohol consumption.  I just think that we should be a little more even handed in what we demonize and attempt to tax out of existence.  Maybe we should tax junk food as if it was bad for our health.  How about that for a novel idea?  And what if we used the proceeds to fund a national health plan.  Any arguments?

Which, of course, brings me back to my favorite subject – the government.  I think people who read my posts are confused about where I stand with regards to government.  And I a liberal?  A conservative?  A libertine?  Oops, I meant libertarian.  So here it is (drum roll please).  I’m for accountable government.

We sometimes get so wrapped up in ideology that we forget that government is simply an institution that, for our tax money, provides services that the private sector can’t perform.  If we spent more time focussed on government accoutability and less time on taking positions we’d get better value for that money.  Whether its healthcare, financial regulations, or national security we should be holding our politicians accountable to delivering results, not simply rhetoric.  How does that translate into votes?  Instead of voting for a party, vote for the man or woman that has proven to be good to their word and has delivered results…as opposed to pork.  Which brings me back to food…

Don’t expect the government to get it right when it comes to your health.  Remember the four food groups (meat, milk, fruit & vegetables, and grains)?  Did you ever wonder how milk got its own group while fruits and vegetables had to share one?  Two words: dairy lobby.  (By the way I have a son that thinks dairy is the only food group.)  Now that we have the food pyramid, meat and milk products have lost some of their clout.  Does this mean that our nutritional needs have changed?  NOT!

So, food can be bad for your health but listening to the government’s guidance on what to eat can be worse.  Better to listen to words of the Oracle of Delphi – “know thyself” and  “nothing to excess” …except on holidays…and birthdays…and weekends…and Red Sox game nights…and…

I’m sitting here watching the U.S. Open final and, surprisingly, Juan Martin Del Potro just upset Roger Federer.  Not only that but early on in the match it looked like Del Potro was heading for an early defeat.  So, once again, it’s been proven that it’s not over until its over.  Which brings me to the stock market…

Everyone is nervously waiting for the market to correct after a huge run up since March.  But with the stock market its true more often than not that it’s not over until it’s over.  In other words, better not to allow the nervousness permeating the press coverage of the market to dictate your decisions.  Let the market itself tell you.  One the most reliable truisms of the market is that it climbs a wall of worry.

That said, I don’t believe we’re out of the woods when it comes to the economy so if you’re not already in the market you should be very selective with how you get in.  Actually, you should be selective because it’s going to be a stock pickers market for some time.  So if you’re not a stock picker then have a good stock picker (such as proven mutual fund manager) do it for you.

Or you could do what I just did and join a portfolio sharing service like Covestor (http://www.covestor.com).  I put my own portfolio up there for the world to see (member name leriksen) but, most importantly, I get to see what other investors who share my investment philosophy are doing.  It’s free to sign up – no catches.  I’ll keep you posted on what I think about it as I start to use it more.

Yesterday was a strange day.  I woke up with a running nose and some feelings of a mild allergy.  Not that I know much about allergies because I haven’t had much experience with them.  But I knew it wasn’t a cold (which I’ve had plenty of experience with).  And it wasn’t just one of those morning things because it persisted all day.  I kept thinking it must be something in the air – but what could it be this time of year?  Today I woke up and it hit me.  Saturday night (the night before I experienced the allergies) I had a large bowl of Pad Thai (a Thai noodle dish with peanuts in it) and I’m slightly allergic to peanuts.  I didn’t recognize it because I’ve never had that kind of a reaction the following day.  I usually just notice some immediate sneezing as well as mild skin reactions. Maybe my diagnosis is off but given that I don’t have any of the symptoms today it’s the best I can come up with.

Which leads me back to the subject of healthcare.  I read an article in the latest Barron’s about a guy named David Goldhill who penned a provocative article on healthcare in September’s Atlantic magazine.  It’s provocative because David is a businessman and card carrying, check writing Democrat and his proposal is one previously championed by Republicans.  You’ll have to read the article – or at least a review – to get more information but I will tell you his prescription.  He advocates health savings accounts because they put control back in the hands of consumers and take it away from the insurance companies.  It doesn’t eliminate health insurance; it simply relegates it to its original function, namely providing insurance against major medical events.  I like it but I doubt it will take root because just about every vested interest will fight it.  Insurance companies will fight it because it diminishes their role and will force them to shrink.  Medical device and pharmaceutical companies will fight it because it’s harder to sell expensive procedures and treatments when the consumer is paying the bill.  And liberal Democrats will fight it because it doesn’t bring them closer to their cherished goal of government run healthcare.

So what do allergies and the current healthcare debate have in common?  Simply that I don’t want someone to tell me how to treat my allergies – or any other health issue I might have.  I want to be able to choose between natural remedies, drugs, or simply modifiying my diet.  I don’t trust governments or insurance companies to make the right decision for me.  As I’ve said before I’m not ideologically opposed to government run healthcare – my experience is that they do just as well as the insurance companies.  I just don’t see how adding a government option on top of the current mess gets us any further ahead.  And I don’t understand how we can get costs down without consumers being responsible for the bill (major accidents and illnesses being covered by insurance).  Maybe someone can enlighten me.

One argument made for government run healthcare is that the average consumer is not capable of making the right decision when it comes to his/her own health.  But that’s an education problem that can be addressed by the government without controlling healthcare resources.  Maybe the government should get involved by funding community health centers and other organizations that promote health and wellness.  That will do more to reduce overall healthcare costs than any other initiative I can think of.  And, for those of us who feel we understand what we need to do to stay healthy but are sometimes reluctant to spend after tax dollars on the our own health, legislate before tax health care savings accounts.  But don’t tell me how to use the funds!  Anything that has anything remotely to do with health – doctors’ visits, homeopathic remedies, health club memberships, smoking cessation programs, massages, etc. – should be allowed.  Talk about driving innovation in healthcare and improving outcomes!  I know, I’m dreaming.  But, hey, we have a black president in the White House so anything is possible.  Maybe he’ll have a healthcare dream himself…

“Adversity is the prosperity of the great.”  (Chinese fortune cookie I opened on the week-end.  Really!)  The summer of ’09 is the summer I find out just how great I am…at least in my mind’s eye.  Let’s see…I have one paying gig, one gig that’s about to pay (or so they tell me), and another that I need to raise capital for before they can pay me.  I think I need someone else to run the accounts receivable side of my business before I go broke!  About that college education kids…

Speaking of adversity let’s talk about the healthcare debate…or is it a debacle?  Will the real healthcare system please stand up.  We seem to have one that’s just fine, one that needs a remodeling, and one that needs to be rebuilt from the ground up.  Personally I’m in American healthcare purgatory – in between the one that was OK (it paid most of my bills, most of the time) and not having one at all.  But I’m sure the President and Congress will have to come to an agreement by the time I need it.

I do sometimes look back with nostalgia on the years we lived in Canada.  It was pretty simply – pay your provincial health premiums, bring your healthcare card to whichever doctor you like where it was swiped just like a credit card.  Of course the doctor had to deal with the government to get paid but that was his/her problem.  I got what I needed.  But, wait, that’s where my first two kids were born, you know, the ones whose college education is now at risk because my healthcare coverage costs are going up.  (Just kidding kids.  BTW, my wife had to stand in line for hours with other women in labor before she was admitted.  NOT!)

But what if I don’t want a healthcare system.  What if I just want good health?  Will the government deliver?  Just like my friends at the (fill in the blank) insurance agency have done for me over the years?  I can just see it now.  I pay a visit to my local branch of USDOHOPE (United States Department of Health Outcomes and Personal Emergencies) and I will be given my week’s supply of vitamins, an exercise regimen, and a bottle of red wine (Californian, of course, because they need their own stimulus program).  Now that’s a change I can believe in!  And worth waiting in line for!  So there Canada!  Beats waiting in line for heart surgery.

But I digress.  What were we talking about?  Healthcare?  Government?  Let’s talk about the latter some more because its so fun.  Great job they’ve done in turning around the economy, eh?  I attribute it to the cash-for-clunkers program.  Unfortunately, I’m not a beneficiary because my 11 year old Sienna with 175K miles on it that conked out on the Mass Pike while coming back from Canada for a medical trip (OK, that last part was made up)  is too fuel efficient.  So instead of getting $4500 towards a new car I put $2700 into a new transmission.  And if I had qualified I would have gotten a new $15K car loan with the deal!  The things I miss out on.

But it’s not just about cash-for-clunkers.  Look at all the good work the government has done in the financial sector.  And I, personally, haven’t had to pay a dime.  In fact, my retirement portfolio (you know the one that still needs 20 years of triple digit contributions and double digit returns for me to retire) is back to where it was a year ago.  Except the part that was in my company 401K which was limited by, yes, government regulations and big company rules.  Which reminds me.  I also need to tell you about the 529 plans I was using for my kids’ education.  Like my healthcare savings account loss mentioned above, my losses in my 529 exceed any tax benefit I got from using it.  But I just know the government’s stimulus plan will have me back in the black on that one by the time my youngest starts college four years from now.  I just know it.

 So the moral of the story is the government has our backs …which positions them well for piling debt repayment on us when the time comes to pay the piper.  You know the old story, pay me now, or pay me later.  But as my good friend Jack likes to remind me, we (the baby boomers) won’t be the ones paying.  No, the flood of retirees will give grey power new meaning.  Sorry, kids, you get the bill.  Make sure you get a good college education (a touchy subject, I know) so you can pay those big tax bills.  Remember, adversity is the prosperity of the great.