Canada's benchmark stock index climbed close to record territory this week, and the latest economic pulse-taking both here and in the U.S. provided fresh evidence that the downturn could turn out to be milder than many experts have been predicting.
But still, there was no shortage of negative news, including more financial services woes.
Insurance giant AIG racked up an historic quarterly loss of $7.8-billion (U.S.), prompting Goldman Sachs to note insightfully that “this was a very bad quarter.”
And then Citigroup announced yesterday that it intends to jettison $500-billion (U.S.) of investment-banking assets. The battered financial heavyweight calls this stuff “non-core.” Everyone else knows it as the junky subprime mortgages and other toxic waste that can no longer be peddled to unwary pension and hedge fund managers.
Mix in record oil prices, soaring food costs, plunging consumer confidence and the latest dreadful housing numbers and there's more than enough ammunition for misery-loves-company types who have found a natural home in the blogosphere.
But fortunately for those of us who prefer our glasses at least half full, not all financial bloggers see only dark clouds whenever they dust off their crystal balls.
Which leads us to the portal of Paul Kedrosky, academic and venture capitalist based in sunny Southern California, whose own daily blog, Infectious Greed (at paul.kedrosky.com), is among the most widely read on the Internet. Indeed, he currently ranks third in voting on ReportonBusiness.com for the most popular finance blogs.
What makes Mr. Kedrosky absolutely unique among market thinkers is that he is in a position to put his finger on the pulse of both Wall Street and Main Street. His readership cuts a broad swath, ranging from the tech players of Silicon Valley, which he knows well, to day traders in Middle America.
What also sets him apart is what he calls his pragmatic optimism, which isn't shared by bearish bloggers and many media types.
“In the media, I think many business journalists confuse critical thinking with skepticism, and they are very different things,” Mr. Kedrosky said via an e-mail missive. “One just means you investigate the basis for claims, while the other means you think everyone in business is full of crap.”
But just because Mr. Kedrosky rejects the notion that the world as we know it is about to blow up doesn't mean he sees clear sailing ahead.
“I'll cheerfully lean bullish or bearish depending on what's happening,” the Canadian expatriate said.
“But I always remember that the last 100 years in the markets have truly been the triumph of the optimists. It makes it a lot harder to make money on the bearish side of things.”
That said, he doesn't expect the U.S. economy to rebound any time soon, because of the combined wallop of climbing oil prices, sliding property values and a weak greenback.
“I have a hard time believing that this passes as quickly and as easily as many expect.” The most likely outcome? A long period of stagnation.
Mr. Kedrosky, who invests in private Canadian companies as a partner with Ventures West Management of Vancouver, sees so many investing errors it's hard to count them all.
For one, people jump in and out of the market too regularly, missing big moves in both directions. Plus, they chase hot funds, “which is consistently a horrible indicator of future performance.” And they are typically overexposed to their home market, a notable trait of U.S. investors.
And what is our blogger's own strategy for coping with these tumultuous times? Keep things simple and diversified, both by asset and geography.
“I like to have most of our personal assets in a smallish group of funds and ETFs, with the general principle being one of making decisions at the portfolio allocation level, and then letting the stocks take care of themselves.”
Will he continue penning his own thoughts for a blog-happy universe, despite the hectic pace of his diverse business and academic interests?
Definitely. “It's just something I do between other things, whether reading papers in the morning, standing in line for airplanes, etc. I enjoy having the outlet.”
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