By
Sampson Iroabuchi Onwuka
I was comparing notes on; A book by Harry S. Dent, Jr. ‘The Next Great Bubble Boom’ 2004 -2009 and there was the interesting notes on what the stages in the economy occurs and why it seem to show up also in the decades. I for one had problems accepting that the numbers in every decade always brought its life into the economy. The attempt at a response to a book that is now predated may not be that relevant and is not is not a final assessment of theory of Harry Dent's and his group of Demographers, or does it attempt to dent a proven system of stock monitoring. However wonderful the reputation from predicting the next boom in 2008 may seem to suggest, it must be mentioned that the essence of predictions such as Harry Dent’s and at large Economics so to speak, is to warn investors of what is possible coming and give them heads up on how to position themselves for such changes.
It does not mean that economic predictions are always right, but money management is also a science that goes with the right frame of mind and discipline, all of which may or may not help to avoid losses, all of which is expected to help us avoid port holes en route to better management of Other People’s Money. For instance, the world popular ‘rich dad…what’s his name? Robert Kiyosaki’s whose predictions on the Dow for 2010 had no bearing to Dow in 2010, does not in business actually diminish the pedigree of the said expert ‘Kiyosaki’ and as such he, Kiyosaki, and others like him such as Mad Money Jim Cramer or Harry Dent will always remain the front lines of world business and from experience know their trade for generating money. In essence, one of the things you are likely to learn about world markets or trade is that ‘past record is not guarantee of future success’. One of the things I for one like about Bloomberg is that he doesn’t assume. He knows better than most people but still want to know. Lets be clear about my position, that I also believe him to be a lousy politician.
The Great American Economist Paul Samuelson on winning the Nobel Prize for Economics chided his Canadian counterpart, Kenneth Galbraith, as been a good Economist for non-Economist. That economic theory relies almost entirely on the application of proven systems to all routine laws of economist. This does not mean that numbers repeat all the time or that prices has history, but it tend to imply that there are fluctuation in any market that obeys the laws of numbers and demographic and in the ‘Next Great Bubble Boom’ Harry Dent used some numbers from previous decades to make an argument about the repeat process in the formative years of the 2000’s reaching eventually to the year of 2008, one year short of the prediction which was actually 2009. The 2008 is well remembered as a year it went bad, but it seems to Dent that 2008 was not an accident that in 1998 there was such similar incident, in 1988 there was something akin to this sort set back and 1978 as well. It may seem that he was hinting that with every 8 is a period of correction which usually begins at the 7th of year of decade. How true is it that going by the facts that these were also great years for some companies? How true this is can be reduced important cyclical events in the life of a decade and Harry Dent makes quite a case for each year.
It is also true that the best investors in business Benjamin Graham, David L. Dodds ‘Security Analysis’ John Burr Williams ‘Theory of Investment Value, J.V Upensky ‘Introduction to Mathematical Probability’, William Strauss and Neil Howe ‘Generations’ ‘Fourth Turning’ ‘Millennial Rising’ and in recent and popular time, Warren Buffet, - who from some of his books placed a high note of emphasis on turns in the market and what cause them. And these people seem to have comfortably adapted to the seasons in the market and Buffet’s case ‘Tap Dance to Work’, but none of these Investors and the ones we may not speak of, including Michael Bloomberg and Boone Pickens, Peter Lynch or David Dreman, Ralph Wanger, or the Big Boss Trump in all their books effectively demonstrated why changes take place in the economy and more than why, how; as far as the rate. They, like Dent just know that it does happen and do have their means and strategies on taking advantage of it including their Blacks, Thomas Rowe Price Jr, Ariel Brown*, Lou Holland, Randall Eley*’, etc.
These people, like Harry Dent, all have means of exacting their profit from the market but make predictions wonderful is it arms with a view for the future and gives people chance to demonstrates what they have learn over the years. But it does give us everything. The closest we have come in truly understanding the risk involved in investing is through the modern school of finance and this school place enormous emphasis on Risk since numbers exist that help anyone foster better actions on the prevailing market, as such, it is not just the risk in the particular sense of probable loss, but why certain risk with or without the numbers would tend to determine the leniency of the investing crowd and hence a fluctuation and a graph. But here, Harry Dent used all kinds of graphs to buttress on his point, especially Robert Prechter ‘Conquer the Crash’ and from the graph provides the reader with timely exercises of the past records with future probabilities.
Dent also drew inspiration from Jeremy Siegel ‘Stocks for the Long Run’ where according to him and according to the fore mentioned experts on money, stock prices have a life and not only the stocks, bonds have a life so does the U.S economy or any economy. From the position of many experts who has taken this subject seriously, there is a form of accounting that deals mainly with demographics of a country, and from the past of economic exercises of the mentioned demographics,we can be able to state for sure what is any sector of the economy and not just the sector, the life of real estate and the individuals that compromise the economy.
Today, U.S cannot for any moment function if not for its breakthroughs in technology and some of which may throw an outsider off and in keeping to the tenets of U.S manufacturing, some decades are better than others and some days better than the rest. For instance, Dent tried to explain that it seems that the beginning of every decade is riddled with the prospect of economic recovery. That every decade which begins with 1’s or 2’s numbers, like 2001 and 2002, is also a period of high economic uncertainty. This uncertainty sometimes affect International Market and the consequence will likely transverse its shake-up period, some of which are more than the consequence of American war efforts and a global pestilence resulting a presence of U.S Army or their NATO allies within a 700 mile radius of any country.
It will seem to appear that this period of great uncertainty like 1991 Iraqi wars also called the Desert Storm began and ended in a decade with as much later as the 1, for instance the 1991, then we notice that in 2001 and 2002, where the years in the decade of the 2000s that is well remembered for attacks on 9/11/2001 and the consequent reaction to these "perpetrators". The stock market at the beginning of that decade took a whole new meaning and then onwards to the 2004 incident of the Archipelago. The economic consequence of those inter weening early years of the decade was the zigzag movement of the Dow and from the troubled movement, the panic over the future of the wars and how long they will last eventually kicked in.
Matters Arising II
What the author, Harry S.Dent, was trying to suggest is that these changes do not just occur, that in keeping to the tensions associated with the U.S presidential elections and change of office which falls on even numbers, majority of the American Industries are also affected by the stretch of the spending and the cuts that accompany them sometime later. That after the Desert Storms and the Peace in the Middle East of the 2001s and 2002’s there is shakeup of the economy and then there is a new increase in spending which in his words leads to an initial recovery period, 2003 – 2004;2012-2014. Then from this era we will witness the acceleration phase which took place in 2005 and 2006. This pattern in his view predicts nothing serious over the years saving for the fact that with each decade, comes new measure on Industry, for instance new products like the ones in the 80’s which led the way in the Technology Industries.
The prove of Harry Dent's projections will make proper sense for the first time buyer entering market or those who are looking for the first time will be looking to buy at the shake off period of the ending with 1s and 2s, and that this so called investor should also be looking to sell at a time at the ‘9’s or at the 8s since these are the years that are mostly associated with a kind of bust, for instance the burst of Long Term Management in Russia took place in 1998, and there was the crisis 1988 in U.S Market and in recent years there was the crisis of 2008. If a person desires to enter the market, there should wait until this presumed economic storm is over and then a shake off period will lead someone to invest when there is blood on the street or a degree of uncertainty.
Let it be said that the Bubbles of 1915-1919 and 1926-1929, Auto Bubbles of 1915 – 1919 and 1925 – 1929 and crashes following the 1919 – 1922 and 1930-1932 presents a theme that is worthy of all consideration in the business structure of the Americans and with due respect, our new Car companies. One of the problems Associated with auto/manufacturing indexing is that they are usually associated with one industry, the Auto Industries is not just about one car or car production, there are resources and device driven exercises which these car companies are equally engaged it.
And then as well as now, the Auto industries are serious litmus towards achieving a good deal of profit in any forward markets.
Harry Dent in this auto/manufacturing sector delivered a remarkable statement in comparing the centuries of the past with human to be reduced to the number 3, for instance when he mentioned that in 1953, 1973, 1993, there were the consequent beginning of the Birth Wave of Country, 1973 is associated with the Innovation Wave, and with the spending wave of 1993, he projected a Power wave in 2013. The 2013 power wave is no doubt on, not that Dent was the only messenger from the 1990s and 2000s who are proclaiming a power and energy wave of the 2013, but his prediction was absolutely spots on with Obama exercises on Energy.
The consequence of being accurate with such numerical plausibility is that everyone will be tempted to sound alarm during those years, and like numbers when right, some of these would be expert would proceed with a false notion that wind of pushing the economic curve of the country to a whole new direction. Above all, a serial order of facts after a series of number may be used to promote anything and make arguments that may seem project a fact where as the facts are on their own and have nothing to do with the year or years concerned. We are left with little choice in bringing to terms such decades are seen or in the time past, in the light new realities which usually creep into a market or any economy during its Innovation period, and from oversight of a small cap company poised to do well in a year of low expectation or high expectation, we notice that these Small Caps or Big Caps are unaffected.
Yes, it is true that small caps do well in the Innovation periods, for instance (1968-1978) as Dent mentioned, that large caps do well during ‘growth period’ (1988-2008) as Dent also mentioned, and as inflation kicks in, Bonds do well during ‘shakeout’ periods (2008 – 2018) as we have seen, and by consequence and last of all, and corporation with long term staying interest in bonds market in its 'single categories' do well as well, and this group will fall in between 2018-2048. But these economic reflexes are likely to change over time and they also are likely to have only a minimum effects on the market, by that we mean that if stocks are to be considered alone and in of itself, they can reflect only so much of a given sector to the degree that individual companies overall numbers may not be that affected. In other words, the five version of the stock market vary in the fluctuation.
In terms of statistics, it is equally common sense to indicate that Harry Dent's use of statistics can be wrong if not misleading, that some basic barometer for instance the co-incidence that Dow Rose in the 2000’s and had a correction of more than 30% and S&P 500 was corrected by 49% due to its higher returns. According to some of the authors, AOL led the way with P/E Ratios of 400 %, the Automobile/Mass manufacturing Bubble advanced from 10% to 90%, but of course you will likely need 10% of the market to break even and to create the necessary event horizon, that is assuming that Dent is correct.
In 2001, for instance, the U.S market did so largely because of official and unofficial capacity of the companies and the problem with such venture capital funds in the private tied themselves close to sources such as Q-Tel and from this informal relationship which involves investment bankers, some companies where slated to simply do better others, others did fail and never quite recovered. Although the practices did raise eyebrows, especially deals concerning the 'no risk' business incentive in a Capital market industry where 'Talent' for risk is resourceful, Government stepping into the business arena, can also change the dynamics for prices and for business. In this circumstance, the left and right of companies and fluctuation on price no longer matters.
But then there are companies that have done their own bit in signing up with the government on such matters as bid-on information technology, while at same time they are relying on these bits of information be part of a past or an era probably gone. Microsoft since launching its company in the 80's has not shed a single day or shed below a running average, so also WalMart as we indicated elsewhere, which does not mean that all companies perform the same function but as Texas Instrument and Bell South, there were high yielding dividend companies as with Forbes, till the end of the initial two. They had good managers and the years doesn't matter.
Tom Shorrock in a recent book 'Spy for Hire' highlighted the compromising structure of the wholesale intelligence society of USA in from about 2001, he made especial emphasis on data mining, which he vaguely but did not fully demonstrate could predicate on who wins in many business circles and who rules the war of financial market place. That data miners were selling information based on fear seem relatively common knowledge, but much less known is the area were outsourcing was a big deal such as the ones that follow SIGINT debacle in 2000, the relationship between buying information gadgets and making one, moved from 17-20% to 80/83% within a matter of years. From these interesting number of citations,
Shorrock mentioned that a time it was conscionable compromise on military Intel which had to be tolerated, but deeper still, the whole deal has become a tool for private ends since public access and private investors from outside the sector was essentially blocked in pursuit of government contracts. These groups as under-listed; BAE systems, L-3/Titan, EDS, General Dynamics, Man Tech, Lockheed Martin, Microsoft, Nortel, Northrop Grumman/Essex, Raytheon, and NCI, will wholly enter the pure play of U.S economic life and interactive Venture between them and the U.S government and the effort in the sector will widen the financial participation of one sector of the economy and it eventually pays.
The outcome is such that private ownership and preferred stocks from around 2001 will tend to operate against public market capitalization and the tendency sparked upwards till sometime in 2004. In the book, Spy for Hire', we learn of this trend from the figure " that capitalization figure, derived from a company's stock price per share and once more, the author included the issue at hand using tracking group that might also include A.G Edwards defense banking group "that Capitalization figure, derived from a company stock price per share multiplied by the total number of shares outstanding, is generally a good indication of investor interest in a specific industry. Collectively, the value of the intelligence pure plays exploded in the first five years of the war on terror, from $980.5 million in 2001 to $8.3 Billion in 2006. You are looking at 900% - increase"
From the statistics and as we proceed, there is a statement the …In some reaction to the rise of Nasdaq in the 2000s, it was driven by companies and not necessarily by the industries, that is in spite of fact that stock market and bond yielded good returns, the sectors varied by the parts played by individual companies where as a game changer like the once from 2001 and the Government, can carry a whole sector in spite of it all. Same with currencies, commodities and ETF, many of which have their hours in the day and days in week, week in the month, etc, and off which in respect to foreign Nationals trading at the same time will vary in the outcomes
Overview III
At the beginning of his writing, the author seems to be in his forte with demographics, how people chance over time but how their numbers also change with them. He mentioned that in the past, that linguist and language experts tried to link human being with the language and the language with their dispersion. In the process, that it was kind of hard to properly connect human with their dispersions route but with DNA and genetic mapping it is now possible. Here, I shall begin to suggest that the Liberace of his opening is a fact that is not quite correct, that DNA samples of some ancestors prove them different from their presumed up-spring, that there are cases of Biological factors that break the expected life cycle of a society or people to the degree that natural disasters can alter of any society.
While the fore mentioned changes are true, they do not conform to the pattern that for every known product or for any the staple for any industry, there are always market or a chance to grow.
Strictly speaking of the United States, it is not impossible to suggest that what is currently defining the country and the century is not just new companies of some wonderful structure but also new companies with their new attitudes to the Global Macro, some of whom should no longer be considered as 'yuppies of technology' who as they suggested, transfer the habit of using new technology from one generation to another. And from all standards, it is Nasdaq and in moderate statement, Google and Face book, that has pushed the limits of the Tech Sectors, although there are strong performers like, Samsung and Toshiba.The outcomes in Japan for instance in the last months, did not necessary affect U.S Market or the world, and in reality no economy that suffered in 2008 should facing the Japanese current reset. China is also re-engineering itself from 9% a year expansion to less 6% expected expansion, all of which is outside the generative examples in Dent's Book.
Yet, none of these companies in Asia and their affiliates associated with Nasdaq fared badly in the decade 2000 - 2010, and with the arrival of Sharing Agencies and Information Carriers such as Google, a boom was created that was not commensurate to any sector or the Nasdaq for instance, and companies like Google has remained on top even since their first launch in spite of the landslide for the past decades. For that, it is common sense to argue that the investment nowadays has not been the same since 1920's, some of the Fundamentals have changed but the great advances in stock businesses can be a symptom of the Technical. As such business in spite of 2008 of recent anon, is problems associated with Stock Prices and movement only to the degree that numbers does not always parallel the economy in terms of the companies with serious background.
These companies includes Google, Amazon, Cisco, Microsoft, Star Bucks, Face book, Guchi (despite being a European Brand), Wal-Mart, whose break off period is about every 1st of July and then sustains itself through the year, Dell, eBay, etc, lead the business community nowadays but may be doing things that has not being done before, for instance, making money at the Shakeout period (Stealth Phase for Chartists) which is usually associated niche markets doing but now companies from with interesting portfolio are meeting obligation. Walmart is no small American success and anyone heard taken the rise of Walmart as a company seriously., they would have realized with the arrival of Chinese and a certain Xiaoping in Texas the rise of a company that cam manufacture nearly thing.
Managerial function IV
With all dues respect to the advice of the experts associated with Harry Dent and the Next boom years, we have to suggest that it is equally easy to attack import spate of good years to these years as well the bad years. Although these managers and owners of these companies are not pronounced as their former compeers such as Walter Disney, Jack Warner, Peter Druckner, Taichi Ohno, W. Edwards Deming and Jack Welch, the fore mentioned companies are doing much better in little else than their technical ability to convert useful information technology and pure play for everyday use. Little else need to be said that companies can not in of itself determine its successes without the positive managers who make the requisite difference. If the early companies did well in the last returning decade, their forebears so to speak also did well, to the point that the cycle that is today celebrated may only be in terms of the presidential cycles and the financial instrument.
Dent spoke of the ‘Roaring Twenties’ may have been characterized by the discoveries in electricity, telephone, triumph drugs companies over measles, small pox etc, and by automobiles industries. In terms of electricity there is the Thomas Edison, Alexander Bell in Telephone, Alexander Jennings though English made his mark with the invention of Penicillin in the United States, and automobiles champions included Henry ford, Wagon, Mustang, and as far as G.M which was a new company in the 1920’s, it was the work of Alfred Sloan and his view of Macro-production that galvanized American industries especially in the occasional direction of Peter Druckner. But the management styles have changes, so also the economy
to equally argue that the Communication moguls such as Rupert Murdoch, Ted Turner, are also leading the economy their own way.
From a regular Chartists and a regular player at the stock market, the numbers work fine and are in fact stables that Buffet use, but the stock market - especially the production numbers are a product of the managerial class.Of course the age of the William Durant who was one of the few giants that refused to add his name to a car line but helped to introduce Louis Chevrolet and Marquise Buick are not exactly over, even if has, Detroit may not agree, yet there are episodes in the evolution of American history that has helped to launch U.S car industries into the new areas from the struggling Innovation Period and struggle with Credit and of S-Curve and beyond.
From this maturation of the Automotive Sector, other international such as Suzuki, Toyota, Honda, Hyundai, etc, benefited by creating their own Auto economy which is in turn? As such the auto industries which the French Emile Peugeot, GM and Ford essentially defined, has now exceeded the statistics of many Americans. In very bad eras, these companies such as the GM and Toyota cooperated with each other and following the founding of UNNIM; United Motors in California, the industry has more than sustained itself by exchanging expertise and sometimes laid off employees.
III
Peter Druckner; some of his thesis are board room mathematics, but his realities are accorded modern management even if he inviolate Charisma of Stalin, Hitler, Moa, etc, as misrule whereas Churchill, Roosevelt, Monty, as people of process.
Charles A. O’ Reilly III and Jeffery Pfeiffer; 2000, reviewing companies from the 80’s and 90’s that drove the two decades completely tried sometime new or at least invented a new way of delivering information, technology or goods for the customers. In all reality, it was the companies that created the decades and not the decade that created the companies. What is however more important is the fact these companies were started by ordinary people with extra-ordinary commitment to make the necessary difference in their industry. It was the function of the managers that determined the outcomes of the companies and it was the companies that eventually generated the incomes.
Herb Keller and Colleen Barrett at South West Airlines under their leadership, South West was best able to overcome nearly all competition, including Delta and USAir’s Metro jet. This group in the 1980’s did much better than their fellow competitors even as the stock of real market did very badly in the 80’s airline stock. The main point is that when other airplane companies such as Vanguard, America West, Reno, Kiwi Air, etc, tried to imitate them in the same business, these companies largely failed.
In the 80's as well, these men, women and their companies; John Chambers and John Morgridge at Cisco Systems, George Zimmer and Charlie Bresler at Men’s Wear house, Jim Goodnight and David Russo at SAS Institute and Pat Kelly and John Sasen at PSS World Medical, Dennis Bakke and Roger Saint at AES, Gary Convis and Jamie Hresko at NUMMI, T.J Rodgers at Cypress Silicon, Diane Burton, and Guido Spichty at Novartis all brought in record numbers in spite of the year, in spite of the decade, in spite of the condition.
Great investors such as Warren Buffet usually acquire some companies not doing very well, and he does so when there is crisis or ‘blood on the street’. In the placing unnecessary bet on the outcomes of these Stock Numbers, he and his colleagues usually spend extra time digging out the good companies with enough to grow or companies that need the necessary liquidity.
The end result is that in the same years and decades that businesses do badly and stock market goes down, these businesses actually acquire momentum. Following Stock Market is not so advisable as following a well managed companies or companies with enough customer base enthusiasm.
Decoupling
With as much decline of Bear Stearn and Lehman Brothers in U.S, there was also the rise of Goldman Sachs of the same year a tumbling at the Wall Street. Event Horizon for Cisco of the 90’s was Microsoft of the 80’s, where as Bill Gates, Andy Grove, Larry Ellison, or Lew Platt of Hewlett-Packard. Sometimes merging two companies was the right recipe for making a decade work.
In one decade it is said that Cisco acquired 44 companies and after acquiring these companies, the CEO then was interviewed, and mentioned that Cisco was trying to ‘shape the future’ of the entire network industry, that is to do for the industry “...what Microsoft did with PCs and IBM did with Mainframes”
In the same year, Abbot Laboratories, Johnson and Johnson, PSS Medical which acquired Taylor Medical and Diagnostic Imaging, did better than average. The same year that AES and Men’s Wear House were all power houses in businesses.
The total amount of Americans with Credit in 2008 constituted only 10% of the population and of only 5% of that number had credit default and the rest of the numbers including non-Mortgage related wealth from other Americans were supposedly not affected the down years in the Stock but apparently it did. Why, Majority of the problems of Stock market is not associated with private companies or better than average placement, it is mainly a product of the current financial environment and not necessarily the big companies.
Many of the companies that fared badly were not good companies and many of them did not have sound business practice and the credit yet, the 2008 was a proven catastrophe.
Apparently the incident of the Stock Market bubble and bust has in the last booming age of the communication experts reduced to the economy or vice versa. But this correlation even for the most advanced of the country is nearly as accurate.
For sure there are plenty of US companies that were affected by the so-called burst of the 2008, but none of the affected companies were main events with direct effects on the country saving for obvious cases of Lehman and Bear Stearns and the poor returns on their high rated mortgages. In 2008, some companies did very well and some companies did very badly and in many ways than one, majority of the companies that fared badly were companies that were dangerously conducting business in their own terms.
In nearly every decade or in every century that was mentioned by Harry Dent, there are problems of big companies failing to meet expectation and their collapse eventually affected others. Given the nature of the registrar these companies usually affect the bottom line of a Sector. It must also be said that but just because one company is affected in stock market does not mean that others are affected, proof of this is that in the same years or decades that stock prices took nose dives, other companies did much better.
In the years of the “5” or the “9” where we buy and sell, there are companies that actually did much better and if investing in the Stock and in the Bond market is all about companies, the Demographers like Harry Dent may do better in advising customers or investors to look at the companies and whole operational portfolio than the indexes which can impacted negatively and positively
The argument is not that Stock market is not influenced by bad management or that draw backs of the U.S stock market does reflect on the economy, or that numbers in stock market does not matter, the point is that all of the above does matter including the demographics, but who exactly ‘does the bell toll’? If an every American is looking to invest in the U.S stock market or any stock market in the world, he should use the book as a break pad into the American Economic life of a country rather, he or she should look at companies on interest and do an overall assessment of any stock market before engaging the company.
Michael Hammer is probably better known for his book ‘Re-engineering the Corporation’ which they claimed defined the 90’s business but in order of Peter Druckner, made a candid and much dissimilar, Michael’s Hammer book that speak on this issue much clearly is called the ‘Agenda’ in 2003 listed what every Company needs to do to ‘dominate the decade.’ From his arguments and the lay out the cases which were not exactly specific,
Scott Eyman in a Biography of Louis B. Mayer; Lion of Hollywood’ detail out the learning curve of the studios that was managed by Mayer called MGM, and attempted to buttress on the man’s reputation as despot. Eyman however mentioned that what was not known about Louis Mayer at MGM is that while other studios ebbed and flowed in finances with due respect to the down years of Hollywood films and down decade like the 50’s, MGM under the management and leadership of Louis Mayer had good returns on their investment, made a lot of interesting Movies in good and bad times and had a lot of spare capacity to build studios of their own interest and buy any Motion Picture Star.
Consequently, when the Hollywood Industries picked up in the 60’s and in the 70’s and Louis Mayer no longer MGM’s CEO and manager, the company lost money both in good and especially in bad times. MGM after the return of Mayer had a few brief moments before his death.
Let us for instance discourse one major event in the whole episode, for instance Starbucks which started its business in 1980 and began to acquire stores by the month. By the end of 80’s, Starbucks had over 200 coffee shops. In fact in 1987 when companies suffered financial reversals in Tokyo Stock Market and in U.S, Starbucks made money than most companies. Here’s the catch, in 1992 when the owner of the company decided to go public, the Starbucks offered $17.00 a share but went up to $22 a share for the first opening day. The Owner was so overwhelmed that he offered buy back option for customers.
In a recent book, by Joseph A. Michelli ‘The Starbuck Experience’; 07, he asked a question “What is the true scale of Starbucks success? If you had invested $10 000 in the Starbucks IPO on the Nasdaq in 1992, your investment would be worth approximately $650, 000 today. Starbucks has grown substantially faster than the average S&P stock.” He continued by citing an example, that “To get a sense of its profitability, one need only appreciate that since 1992, the value of the S&P rose 200 percent, the Dow 230 percent, the Nasdaq 280 percent, but Starbucks? – 5000 percent!”
Through those up and downs in the stock market and throughout those bad decades and presidential cycles, and new era or good or not so good wars and pestilence, Stable products such as Coffee with well managed companies like Starbucks or even McDonald, has sustained its brand and quality with or without the booms elsewhere. From this view we can state the examples that Dent and his fellow Demographers provide are not essentially wrong but not ultimately the better business practice.
Sampson Iroabuchi Onwuka
I was comparing notes on; A book by Harry S. Dent, Jr. ‘The Next Great Bubble Boom’ 2004 -2009 and there was the interesting notes on what the stages in the economy occurs and why it seem to show up also in the decades. I for one had problems accepting that the numbers in every decade always brought its life into the economy. The attempt at a response to a book that is now predated may not be that relevant and is not is not a final assessment of theory of Harry Dent's and his group of Demographers, or does it attempt to dent a proven system of stock monitoring. However wonderful the reputation from predicting the next boom in 2008 may seem to suggest, it must be mentioned that the essence of predictions such as Harry Dent’s and at large Economics so to speak, is to warn investors of what is possible coming and give them heads up on how to position themselves for such changes.
It does not mean that economic predictions are always right, but money management is also a science that goes with the right frame of mind and discipline, all of which may or may not help to avoid losses, all of which is expected to help us avoid port holes en route to better management of Other People’s Money. For instance, the world popular ‘rich dad…what’s his name? Robert Kiyosaki’s whose predictions on the Dow for 2010 had no bearing to Dow in 2010, does not in business actually diminish the pedigree of the said expert ‘Kiyosaki’ and as such he, Kiyosaki, and others like him such as Mad Money Jim Cramer or Harry Dent will always remain the front lines of world business and from experience know their trade for generating money. In essence, one of the things you are likely to learn about world markets or trade is that ‘past record is not guarantee of future success’. One of the things I for one like about Bloomberg is that he doesn’t assume. He knows better than most people but still want to know. Lets be clear about my position, that I also believe him to be a lousy politician.
The Great American Economist Paul Samuelson on winning the Nobel Prize for Economics chided his Canadian counterpart, Kenneth Galbraith, as been a good Economist for non-Economist. That economic theory relies almost entirely on the application of proven systems to all routine laws of economist. This does not mean that numbers repeat all the time or that prices has history, but it tend to imply that there are fluctuation in any market that obeys the laws of numbers and demographic and in the ‘Next Great Bubble Boom’ Harry Dent used some numbers from previous decades to make an argument about the repeat process in the formative years of the 2000’s reaching eventually to the year of 2008, one year short of the prediction which was actually 2009. The 2008 is well remembered as a year it went bad, but it seems to Dent that 2008 was not an accident that in 1998 there was such similar incident, in 1988 there was something akin to this sort set back and 1978 as well. It may seem that he was hinting that with every 8 is a period of correction which usually begins at the 7th of year of decade. How true is it that going by the facts that these were also great years for some companies? How true this is can be reduced important cyclical events in the life of a decade and Harry Dent makes quite a case for each year.
It is also true that the best investors in business Benjamin Graham, David L. Dodds ‘Security Analysis’ John Burr Williams ‘Theory of Investment Value, J.V Upensky ‘Introduction to Mathematical Probability’, William Strauss and Neil Howe ‘Generations’ ‘Fourth Turning’ ‘Millennial Rising’ and in recent and popular time, Warren Buffet, - who from some of his books placed a high note of emphasis on turns in the market and what cause them. And these people seem to have comfortably adapted to the seasons in the market and Buffet’s case ‘Tap Dance to Work’, but none of these Investors and the ones we may not speak of, including Michael Bloomberg and Boone Pickens, Peter Lynch or David Dreman, Ralph Wanger, or the Big Boss Trump in all their books effectively demonstrated why changes take place in the economy and more than why, how; as far as the rate. They, like Dent just know that it does happen and do have their means and strategies on taking advantage of it including their Blacks, Thomas Rowe Price Jr, Ariel Brown*, Lou Holland, Randall Eley*’, etc.
These people, like Harry Dent, all have means of exacting their profit from the market but make predictions wonderful is it arms with a view for the future and gives people chance to demonstrates what they have learn over the years. But it does give us everything. The closest we have come in truly understanding the risk involved in investing is through the modern school of finance and this school place enormous emphasis on Risk since numbers exist that help anyone foster better actions on the prevailing market, as such, it is not just the risk in the particular sense of probable loss, but why certain risk with or without the numbers would tend to determine the leniency of the investing crowd and hence a fluctuation and a graph. But here, Harry Dent used all kinds of graphs to buttress on his point, especially Robert Prechter ‘Conquer the Crash’ and from the graph provides the reader with timely exercises of the past records with future probabilities.
Dent also drew inspiration from Jeremy Siegel ‘Stocks for the Long Run’ where according to him and according to the fore mentioned experts on money, stock prices have a life and not only the stocks, bonds have a life so does the U.S economy or any economy. From the position of many experts who has taken this subject seriously, there is a form of accounting that deals mainly with demographics of a country, and from the past of economic exercises of the mentioned demographics,we can be able to state for sure what is any sector of the economy and not just the sector, the life of real estate and the individuals that compromise the economy.
Today, U.S cannot for any moment function if not for its breakthroughs in technology and some of which may throw an outsider off and in keeping to the tenets of U.S manufacturing, some decades are better than others and some days better than the rest. For instance, Dent tried to explain that it seems that the beginning of every decade is riddled with the prospect of economic recovery. That every decade which begins with 1’s or 2’s numbers, like 2001 and 2002, is also a period of high economic uncertainty. This uncertainty sometimes affect International Market and the consequence will likely transverse its shake-up period, some of which are more than the consequence of American war efforts and a global pestilence resulting a presence of U.S Army or their NATO allies within a 700 mile radius of any country.
It will seem to appear that this period of great uncertainty like 1991 Iraqi wars also called the Desert Storm began and ended in a decade with as much later as the 1, for instance the 1991, then we notice that in 2001 and 2002, where the years in the decade of the 2000s that is well remembered for attacks on 9/11/2001 and the consequent reaction to these "perpetrators". The stock market at the beginning of that decade took a whole new meaning and then onwards to the 2004 incident of the Archipelago. The economic consequence of those inter weening early years of the decade was the zigzag movement of the Dow and from the troubled movement, the panic over the future of the wars and how long they will last eventually kicked in.
Matters Arising II
What the author, Harry S.Dent, was trying to suggest is that these changes do not just occur, that in keeping to the tensions associated with the U.S presidential elections and change of office which falls on even numbers, majority of the American Industries are also affected by the stretch of the spending and the cuts that accompany them sometime later. That after the Desert Storms and the Peace in the Middle East of the 2001s and 2002’s there is shakeup of the economy and then there is a new increase in spending which in his words leads to an initial recovery period, 2003 – 2004;2012-2014. Then from this era we will witness the acceleration phase which took place in 2005 and 2006. This pattern in his view predicts nothing serious over the years saving for the fact that with each decade, comes new measure on Industry, for instance new products like the ones in the 80’s which led the way in the Technology Industries.
The prove of Harry Dent's projections will make proper sense for the first time buyer entering market or those who are looking for the first time will be looking to buy at the shake off period of the ending with 1s and 2s, and that this so called investor should also be looking to sell at a time at the ‘9’s or at the 8s since these are the years that are mostly associated with a kind of bust, for instance the burst of Long Term Management in Russia took place in 1998, and there was the crisis 1988 in U.S Market and in recent years there was the crisis of 2008. If a person desires to enter the market, there should wait until this presumed economic storm is over and then a shake off period will lead someone to invest when there is blood on the street or a degree of uncertainty.
Let it be said that the Bubbles of 1915-1919 and 1926-1929, Auto Bubbles of 1915 – 1919 and 1925 – 1929 and crashes following the 1919 – 1922 and 1930-1932 presents a theme that is worthy of all consideration in the business structure of the Americans and with due respect, our new Car companies. One of the problems Associated with auto/manufacturing indexing is that they are usually associated with one industry, the Auto Industries is not just about one car or car production, there are resources and device driven exercises which these car companies are equally engaged it.
And then as well as now, the Auto industries are serious litmus towards achieving a good deal of profit in any forward markets.
Harry Dent in this auto/manufacturing sector delivered a remarkable statement in comparing the centuries of the past with human to be reduced to the number 3, for instance when he mentioned that in 1953, 1973, 1993, there were the consequent beginning of the Birth Wave of Country, 1973 is associated with the Innovation Wave, and with the spending wave of 1993, he projected a Power wave in 2013. The 2013 power wave is no doubt on, not that Dent was the only messenger from the 1990s and 2000s who are proclaiming a power and energy wave of the 2013, but his prediction was absolutely spots on with Obama exercises on Energy.
The consequence of being accurate with such numerical plausibility is that everyone will be tempted to sound alarm during those years, and like numbers when right, some of these would be expert would proceed with a false notion that wind of pushing the economic curve of the country to a whole new direction. Above all, a serial order of facts after a series of number may be used to promote anything and make arguments that may seem project a fact where as the facts are on their own and have nothing to do with the year or years concerned. We are left with little choice in bringing to terms such decades are seen or in the time past, in the light new realities which usually creep into a market or any economy during its Innovation period, and from oversight of a small cap company poised to do well in a year of low expectation or high expectation, we notice that these Small Caps or Big Caps are unaffected.
Yes, it is true that small caps do well in the Innovation periods, for instance (1968-1978) as Dent mentioned, that large caps do well during ‘growth period’ (1988-2008) as Dent also mentioned, and as inflation kicks in, Bonds do well during ‘shakeout’ periods (2008 – 2018) as we have seen, and by consequence and last of all, and corporation with long term staying interest in bonds market in its 'single categories' do well as well, and this group will fall in between 2018-2048. But these economic reflexes are likely to change over time and they also are likely to have only a minimum effects on the market, by that we mean that if stocks are to be considered alone and in of itself, they can reflect only so much of a given sector to the degree that individual companies overall numbers may not be that affected. In other words, the five version of the stock market vary in the fluctuation.
In terms of statistics, it is equally common sense to indicate that Harry Dent's use of statistics can be wrong if not misleading, that some basic barometer for instance the co-incidence that Dow Rose in the 2000’s and had a correction of more than 30% and S&P 500 was corrected by 49% due to its higher returns. According to some of the authors, AOL led the way with P/E Ratios of 400 %, the Automobile/Mass manufacturing Bubble advanced from 10% to 90%, but of course you will likely need 10% of the market to break even and to create the necessary event horizon, that is assuming that Dent is correct.
In 2001, for instance, the U.S market did so largely because of official and unofficial capacity of the companies and the problem with such venture capital funds in the private tied themselves close to sources such as Q-Tel and from this informal relationship which involves investment bankers, some companies where slated to simply do better others, others did fail and never quite recovered. Although the practices did raise eyebrows, especially deals concerning the 'no risk' business incentive in a Capital market industry where 'Talent' for risk is resourceful, Government stepping into the business arena, can also change the dynamics for prices and for business. In this circumstance, the left and right of companies and fluctuation on price no longer matters.
But then there are companies that have done their own bit in signing up with the government on such matters as bid-on information technology, while at same time they are relying on these bits of information be part of a past or an era probably gone. Microsoft since launching its company in the 80's has not shed a single day or shed below a running average, so also WalMart as we indicated elsewhere, which does not mean that all companies perform the same function but as Texas Instrument and Bell South, there were high yielding dividend companies as with Forbes, till the end of the initial two. They had good managers and the years doesn't matter.
Tom Shorrock in a recent book 'Spy for Hire' highlighted the compromising structure of the wholesale intelligence society of USA in from about 2001, he made especial emphasis on data mining, which he vaguely but did not fully demonstrate could predicate on who wins in many business circles and who rules the war of financial market place. That data miners were selling information based on fear seem relatively common knowledge, but much less known is the area were outsourcing was a big deal such as the ones that follow SIGINT debacle in 2000, the relationship between buying information gadgets and making one, moved from 17-20% to 80/83% within a matter of years. From these interesting number of citations,
Shorrock mentioned that a time it was conscionable compromise on military Intel which had to be tolerated, but deeper still, the whole deal has become a tool for private ends since public access and private investors from outside the sector was essentially blocked in pursuit of government contracts. These groups as under-listed; BAE systems, L-3/Titan, EDS, General Dynamics, Man Tech, Lockheed Martin, Microsoft, Nortel, Northrop Grumman/Essex, Raytheon, and NCI, will wholly enter the pure play of U.S economic life and interactive Venture between them and the U.S government and the effort in the sector will widen the financial participation of one sector of the economy and it eventually pays.
The outcome is such that private ownership and preferred stocks from around 2001 will tend to operate against public market capitalization and the tendency sparked upwards till sometime in 2004. In the book, Spy for Hire', we learn of this trend from the figure " that capitalization figure, derived from a company's stock price per share and once more, the author included the issue at hand using tracking group that might also include A.G Edwards defense banking group "that Capitalization figure, derived from a company stock price per share multiplied by the total number of shares outstanding, is generally a good indication of investor interest in a specific industry. Collectively, the value of the intelligence pure plays exploded in the first five years of the war on terror, from $980.5 million in 2001 to $8.3 Billion in 2006. You are looking at 900% - increase"
From the statistics and as we proceed, there is a statement the …In some reaction to the rise of Nasdaq in the 2000s, it was driven by companies and not necessarily by the industries, that is in spite of fact that stock market and bond yielded good returns, the sectors varied by the parts played by individual companies where as a game changer like the once from 2001 and the Government, can carry a whole sector in spite of it all. Same with currencies, commodities and ETF, many of which have their hours in the day and days in week, week in the month, etc, and off which in respect to foreign Nationals trading at the same time will vary in the outcomes
Overview III
At the beginning of his writing, the author seems to be in his forte with demographics, how people chance over time but how their numbers also change with them. He mentioned that in the past, that linguist and language experts tried to link human being with the language and the language with their dispersion. In the process, that it was kind of hard to properly connect human with their dispersions route but with DNA and genetic mapping it is now possible. Here, I shall begin to suggest that the Liberace of his opening is a fact that is not quite correct, that DNA samples of some ancestors prove them different from their presumed up-spring, that there are cases of Biological factors that break the expected life cycle of a society or people to the degree that natural disasters can alter of any society.
While the fore mentioned changes are true, they do not conform to the pattern that for every known product or for any the staple for any industry, there are always market or a chance to grow.
Strictly speaking of the United States, it is not impossible to suggest that what is currently defining the country and the century is not just new companies of some wonderful structure but also new companies with their new attitudes to the Global Macro, some of whom should no longer be considered as 'yuppies of technology' who as they suggested, transfer the habit of using new technology from one generation to another. And from all standards, it is Nasdaq and in moderate statement, Google and Face book, that has pushed the limits of the Tech Sectors, although there are strong performers like, Samsung and Toshiba.The outcomes in Japan for instance in the last months, did not necessary affect U.S Market or the world, and in reality no economy that suffered in 2008 should facing the Japanese current reset. China is also re-engineering itself from 9% a year expansion to less 6% expected expansion, all of which is outside the generative examples in Dent's Book.
Yet, none of these companies in Asia and their affiliates associated with Nasdaq fared badly in the decade 2000 - 2010, and with the arrival of Sharing Agencies and Information Carriers such as Google, a boom was created that was not commensurate to any sector or the Nasdaq for instance, and companies like Google has remained on top even since their first launch in spite of the landslide for the past decades. For that, it is common sense to argue that the investment nowadays has not been the same since 1920's, some of the Fundamentals have changed but the great advances in stock businesses can be a symptom of the Technical. As such business in spite of 2008 of recent anon, is problems associated with Stock Prices and movement only to the degree that numbers does not always parallel the economy in terms of the companies with serious background.
These companies includes Google, Amazon, Cisco, Microsoft, Star Bucks, Face book, Guchi (despite being a European Brand), Wal-Mart, whose break off period is about every 1st of July and then sustains itself through the year, Dell, eBay, etc, lead the business community nowadays but may be doing things that has not being done before, for instance, making money at the Shakeout period (Stealth Phase for Chartists) which is usually associated niche markets doing but now companies from with interesting portfolio are meeting obligation. Walmart is no small American success and anyone heard taken the rise of Walmart as a company seriously., they would have realized with the arrival of Chinese and a certain Xiaoping in Texas the rise of a company that cam manufacture nearly thing.
Managerial function IV
With all dues respect to the advice of the experts associated with Harry Dent and the Next boom years, we have to suggest that it is equally easy to attack import spate of good years to these years as well the bad years. Although these managers and owners of these companies are not pronounced as their former compeers such as Walter Disney, Jack Warner, Peter Druckner, Taichi Ohno, W. Edwards Deming and Jack Welch, the fore mentioned companies are doing much better in little else than their technical ability to convert useful information technology and pure play for everyday use. Little else need to be said that companies can not in of itself determine its successes without the positive managers who make the requisite difference. If the early companies did well in the last returning decade, their forebears so to speak also did well, to the point that the cycle that is today celebrated may only be in terms of the presidential cycles and the financial instrument.
Dent spoke of the ‘Roaring Twenties’ may have been characterized by the discoveries in electricity, telephone, triumph drugs companies over measles, small pox etc, and by automobiles industries. In terms of electricity there is the Thomas Edison, Alexander Bell in Telephone, Alexander Jennings though English made his mark with the invention of Penicillin in the United States, and automobiles champions included Henry ford, Wagon, Mustang, and as far as G.M which was a new company in the 1920’s, it was the work of Alfred Sloan and his view of Macro-production that galvanized American industries especially in the occasional direction of Peter Druckner. But the management styles have changes, so also the economy
to equally argue that the Communication moguls such as Rupert Murdoch, Ted Turner, are also leading the economy their own way.
From a regular Chartists and a regular player at the stock market, the numbers work fine and are in fact stables that Buffet use, but the stock market - especially the production numbers are a product of the managerial class.Of course the age of the William Durant who was one of the few giants that refused to add his name to a car line but helped to introduce Louis Chevrolet and Marquise Buick are not exactly over, even if has, Detroit may not agree, yet there are episodes in the evolution of American history that has helped to launch U.S car industries into the new areas from the struggling Innovation Period and struggle with Credit and of S-Curve and beyond.
From this maturation of the Automotive Sector, other international such as Suzuki, Toyota, Honda, Hyundai, etc, benefited by creating their own Auto economy which is in turn? As such the auto industries which the French Emile Peugeot, GM and Ford essentially defined, has now exceeded the statistics of many Americans. In very bad eras, these companies such as the GM and Toyota cooperated with each other and following the founding of UNNIM; United Motors in California, the industry has more than sustained itself by exchanging expertise and sometimes laid off employees.
III
Peter Druckner; some of his thesis are board room mathematics, but his realities are accorded modern management even if he inviolate Charisma of Stalin, Hitler, Moa, etc, as misrule whereas Churchill, Roosevelt, Monty, as people of process.
Charles A. O’ Reilly III and Jeffery Pfeiffer; 2000, reviewing companies from the 80’s and 90’s that drove the two decades completely tried sometime new or at least invented a new way of delivering information, technology or goods for the customers. In all reality, it was the companies that created the decades and not the decade that created the companies. What is however more important is the fact these companies were started by ordinary people with extra-ordinary commitment to make the necessary difference in their industry. It was the function of the managers that determined the outcomes of the companies and it was the companies that eventually generated the incomes.
Herb Keller and Colleen Barrett at South West Airlines under their leadership, South West was best able to overcome nearly all competition, including Delta and USAir’s Metro jet. This group in the 1980’s did much better than their fellow competitors even as the stock of real market did very badly in the 80’s airline stock. The main point is that when other airplane companies such as Vanguard, America West, Reno, Kiwi Air, etc, tried to imitate them in the same business, these companies largely failed.
In the 80's as well, these men, women and their companies; John Chambers and John Morgridge at Cisco Systems, George Zimmer and Charlie Bresler at Men’s Wear house, Jim Goodnight and David Russo at SAS Institute and Pat Kelly and John Sasen at PSS World Medical, Dennis Bakke and Roger Saint at AES, Gary Convis and Jamie Hresko at NUMMI, T.J Rodgers at Cypress Silicon, Diane Burton, and Guido Spichty at Novartis all brought in record numbers in spite of the year, in spite of the decade, in spite of the condition.
Great investors such as Warren Buffet usually acquire some companies not doing very well, and he does so when there is crisis or ‘blood on the street’. In the placing unnecessary bet on the outcomes of these Stock Numbers, he and his colleagues usually spend extra time digging out the good companies with enough to grow or companies that need the necessary liquidity.
The end result is that in the same years and decades that businesses do badly and stock market goes down, these businesses actually acquire momentum. Following Stock Market is not so advisable as following a well managed companies or companies with enough customer base enthusiasm.
Decoupling
With as much decline of Bear Stearn and Lehman Brothers in U.S, there was also the rise of Goldman Sachs of the same year a tumbling at the Wall Street. Event Horizon for Cisco of the 90’s was Microsoft of the 80’s, where as Bill Gates, Andy Grove, Larry Ellison, or Lew Platt of Hewlett-Packard. Sometimes merging two companies was the right recipe for making a decade work.
In one decade it is said that Cisco acquired 44 companies and after acquiring these companies, the CEO then was interviewed, and mentioned that Cisco was trying to ‘shape the future’ of the entire network industry, that is to do for the industry “...what Microsoft did with PCs and IBM did with Mainframes”
In the same year, Abbot Laboratories, Johnson and Johnson, PSS Medical which acquired Taylor Medical and Diagnostic Imaging, did better than average. The same year that AES and Men’s Wear House were all power houses in businesses.
The total amount of Americans with Credit in 2008 constituted only 10% of the population and of only 5% of that number had credit default and the rest of the numbers including non-Mortgage related wealth from other Americans were supposedly not affected the down years in the Stock but apparently it did. Why, Majority of the problems of Stock market is not associated with private companies or better than average placement, it is mainly a product of the current financial environment and not necessarily the big companies.
Many of the companies that fared badly were not good companies and many of them did not have sound business practice and the credit yet, the 2008 was a proven catastrophe.
Apparently the incident of the Stock Market bubble and bust has in the last booming age of the communication experts reduced to the economy or vice versa. But this correlation even for the most advanced of the country is nearly as accurate.
For sure there are plenty of US companies that were affected by the so-called burst of the 2008, but none of the affected companies were main events with direct effects on the country saving for obvious cases of Lehman and Bear Stearns and the poor returns on their high rated mortgages. In 2008, some companies did very well and some companies did very badly and in many ways than one, majority of the companies that fared badly were companies that were dangerously conducting business in their own terms.
In nearly every decade or in every century that was mentioned by Harry Dent, there are problems of big companies failing to meet expectation and their collapse eventually affected others. Given the nature of the registrar these companies usually affect the bottom line of a Sector. It must also be said that but just because one company is affected in stock market does not mean that others are affected, proof of this is that in the same years or decades that stock prices took nose dives, other companies did much better.
In the years of the “5” or the “9” where we buy and sell, there are companies that actually did much better and if investing in the Stock and in the Bond market is all about companies, the Demographers like Harry Dent may do better in advising customers or investors to look at the companies and whole operational portfolio than the indexes which can impacted negatively and positively
The argument is not that Stock market is not influenced by bad management or that draw backs of the U.S stock market does reflect on the economy, or that numbers in stock market does not matter, the point is that all of the above does matter including the demographics, but who exactly ‘does the bell toll’? If an every American is looking to invest in the U.S stock market or any stock market in the world, he should use the book as a break pad into the American Economic life of a country rather, he or she should look at companies on interest and do an overall assessment of any stock market before engaging the company.
Michael Hammer is probably better known for his book ‘Re-engineering the Corporation’ which they claimed defined the 90’s business but in order of Peter Druckner, made a candid and much dissimilar, Michael’s Hammer book that speak on this issue much clearly is called the ‘Agenda’ in 2003 listed what every Company needs to do to ‘dominate the decade.’ From his arguments and the lay out the cases which were not exactly specific,
Scott Eyman in a Biography of Louis B. Mayer; Lion of Hollywood’ detail out the learning curve of the studios that was managed by Mayer called MGM, and attempted to buttress on the man’s reputation as despot. Eyman however mentioned that what was not known about Louis Mayer at MGM is that while other studios ebbed and flowed in finances with due respect to the down years of Hollywood films and down decade like the 50’s, MGM under the management and leadership of Louis Mayer had good returns on their investment, made a lot of interesting Movies in good and bad times and had a lot of spare capacity to build studios of their own interest and buy any Motion Picture Star.
Consequently, when the Hollywood Industries picked up in the 60’s and in the 70’s and Louis Mayer no longer MGM’s CEO and manager, the company lost money both in good and especially in bad times. MGM after the return of Mayer had a few brief moments before his death.
Let us for instance discourse one major event in the whole episode, for instance Starbucks which started its business in 1980 and began to acquire stores by the month. By the end of 80’s, Starbucks had over 200 coffee shops. In fact in 1987 when companies suffered financial reversals in Tokyo Stock Market and in U.S, Starbucks made money than most companies. Here’s the catch, in 1992 when the owner of the company decided to go public, the Starbucks offered $17.00 a share but went up to $22 a share for the first opening day. The Owner was so overwhelmed that he offered buy back option for customers.
In a recent book, by Joseph A. Michelli ‘The Starbuck Experience’; 07, he asked a question “What is the true scale of Starbucks success? If you had invested $10 000 in the Starbucks IPO on the Nasdaq in 1992, your investment would be worth approximately $650, 000 today. Starbucks has grown substantially faster than the average S&P stock.” He continued by citing an example, that “To get a sense of its profitability, one need only appreciate that since 1992, the value of the S&P rose 200 percent, the Dow 230 percent, the Nasdaq 280 percent, but Starbucks? – 5000 percent!”
Through those up and downs in the stock market and throughout those bad decades and presidential cycles, and new era or good or not so good wars and pestilence, Stable products such as Coffee with well managed companies like Starbucks or even McDonald, has sustained its brand and quality with or without the booms elsewhere. From this view we can state the examples that Dent and his fellow Demographers provide are not essentially wrong but not ultimately the better business practice.
