Have a Happy and Reflective Fourth of July - 07/02/09

July 2, 2009

Have a Happy and Reflective Fourth of July
By Doug Kass, The Edge

On our country's birthday, introspection should share the stage with celebration.

Down in the shadow of the penitentiary
Out by the gas fires of the refinery
I'm 10 years burning down the road
Nowhere to run, ain't got nowhere to go
Born in the U.S.A.
I was born in the U.S.A. now
Born in the U.S.A.
I'm a long-gone daddy in the U.S.A. now.
-- Bruce Springsteen, "Born in the U.S.A."
As we mark our country's independence on Saturday, there are worrisome issues -- issues that will test our collective backbones and that will require sacrifice, resulting in a reset lower to our quality and standard of living.
It's more than just the prospects of a double-dip discussed in today's opening missive.
At the core of the upcoming period, which has the potential to become the decade of our discontent, are key questions regarding the ease in which we shift and adapt toward:
? the growing instability and future lower growth of our economy;
? a perilously high (and going higher) unemployment rate;
? the economic and social ramifications of a downshift from our profligate consumption over the past decade; and
? a raised sense of mistrust toward many private and public institutions, including our lending investing institutions.
In all likelihood the above factors (and others) will contribute to a backdrop that will likely produce less-than-average historical P/E multiples and continued substandard investment returns for some time to come.
This Saturday, on our country's birthday, introspection should share the stage with celebration.