I so want to believe Tyler Cowen, an economics professor at George Mason University, that The Great Stagnation is coming to an end. In terms of timing, Mr. Cowen is a bit fuzzy, and not saying this quarter, or even next, but in the next decade or so. Does Mr. Cowen not understand that any Wall Street trader worth his paycheck only cares about the next five minutes, not the next decade?
Mr. Cowen does have his chorus, including Nariman Behgravesh at IHS Global Insight, and Adam Parker, Morgan Staley’s chief U.S. equity strategist.
Cowen’s reasons for making this prognostication do make sense. He believes the economy will ‘take off’ because of:
- The impact of new technologies such as artificial intelligence and online education;
- Increased domestic energy production; and
- Slowing growth in the cost of health care.
The negatives are still there: Principally, an aging population, government budget cuts, growing income inequality and four million long-term unemployed workers.
Certainly, no one if forecasting a doubling of GNP growth to four percent, but rather to 3.0 to 3.8 percent. If you’re anything like me, you’ll take any upturn, however slight.
To me, the major, unequivocal pro is the increased domestic energy production; we still have a long, long way to go to control healthcare costs. Some of the new technologies are attempting to address this monolithic issue. Social change, which is a big part of what is needed, proceeds very, very slowly.
My business depends on the optimists among us. Those with enough courage to start a company, hire people, and pursue a growth strategy. Given the current statistics, I’m depending on people to succeed by dint force of their creativity and their personality.
A key part of what I do is judge whether or not a company is salable. So many things go into that equation, both internal and external factors. From an internal perspective: the market, the founder, the employees, the size of company, its profitability and growth rates. From an external perspective: the mood of the financial markets, the economy, the growth of the market. I need a pioneering, thriving company as well as a forward-looking, optimistic buyer.
Buyers are optimistic in good financial times and pessimistic in poor financial times. While there is always an exception to the rule, always sell your company in an up market. Which is where we come full circle.
Mergers have declined 40 percent over last year, and we aren’t even going to talk about private placements. If Cowen is correct, we should have sizeable pent up demand on both buyers and sellers.
May the good times re-commence! What do you think? How do you read the tea leaves?