2010-Looking into the Crystal Ball



"Never mind next year, I am wondering what will happen tomorrow," said one Senior Vice President of Administration for a major public company. He continues, "We're all waiting for someone else to take the next step and start spending." True, we all seem to be the boys and girls with shaking knees at the dance wondering who is going to be the first out on the floor. When asking about the future, common responses range from what is happening today to what might happen tomorrow...literally. General consensus has been that forecasting four quarters into 2010 is difficult if not impossible, highly absurd, and better left to Tarot card readers. Very few people predicted the intensity of this recession, and consequently, few agree on how the path to recovery will look.

We asked a few of our clients to peer into their proverbial crystal ball and here are their comments:

"Our strategy is to wait and see; all of our major projects are on hold until we see what the economy is going to do," said the Vice President of Human Resources for a global energy company. Shortly after the conversation, the company announced that they are being acquired in an all stock (no cash) deal.

A former principal and founding partner of a private equity fund mentioned that "everyone that I talk to is saying they are not going to do anything until they see some stability in the market". He went on to say that funding "dried up" in the fourth quarter last year and it was evident that in the first quarter of this year, nothing was going to change quickly, even when looking towards 2010.

Some opportunistically see the market next year as a chance to do deals that were unthinkable just a year ago given that heavily discounted assets are for sale at fire sale prices. "We see this market as an opportunity to strengthen our
balance sheet and add to our asset portfolio," said the CFO for a private equity backed chemical company.

When asked the question, a prominent international securities attorney replied, "The world is going to be a different place and the economy is going to look very different from what it did prior to this global recession. Not necessarily doom and gloom but markets are going to be created and sustained differently from what we knew them to be. Success will come to those who are able to adapt."

The Managing Partner of a $2 billion wealth management company advised that you should "take a deep breath, go back to work and continue to invest in your retirement." As he sees it, there will always be ebbs and flows in business cycles, and this recession is just another example of that. He does not know what will happen in 2010 more than any of the rest of us, but knows that long term we will return to economic prosperity. "WE know how this story will end," he says in a commanding voice with no hesitation.

So, while we are still in the fog with respect to next year, the "one day at a time" mantra that is the foundation for recovery and addiction programs might also be the only answer to our recovery. Maybe we are seeing signs of recovery, the nation's GDP declined 1% in the second quarter, less than it did in the first quarter and the DJIA and NASDAQ have been up more than they have been down. Oh, but there are more pieces to this economic puzzle, and the only thing we are certain of is...uncertainty.

Tell us what you think! The Alexander Group would like to hear your thoughts on this question and will post your answers in next week's blog and to our Facebook page.

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