Posted By: Matthias Paul Kuhlmey
I. Status-Quo
It was quite the fascinating spectacle, not only for little boys, when about two weeks ago, the final journey of the Space Shuttle Enterprise took course over New York skies. The “retired” shuttle will be installed at the Intrepid Sea, Air and Space Museum on the Hudson River and will go on display July 19, 2012.
“Nice,” one may think, as something “quite distant,” at least under previously normal circumstances, will become closer to the eye of an observer. On the other hand, this is a somewhat “tragic retirement,” as nothing comparable, at least so far, has replaced the Shuttle or the entire related Space Mission. The same is true for the once fastest passenger plane, the Concorde, which was taken out of service in 2003 and not yet replaced with an equivalent. No longer being able to fly between London and New York in about 3.5 hours, or to lift-off to space in a manned spacecraft, makes us wonder whether we are truly creating a technological evolution, or if we may be moving backwards (hopefully to prepare for the next “wave forward”).
When observing today’s state of global financial markets, especially when ignoring the “noise” of intraday trading of financial instruments and their price movements/valuations, one may wonder if we are moving backwards in this area, as well. If the situation is evaluated on a purely nominal basis (for most onlookers, a relevant indicator is the level of stock markets), the anticipated economic recovery since the onset of the Credit Crisis of 2008/2009 may well be underway. If, however, this aspect is judged from a broader perspective, the global economy and related financial markets may have become a place with increased levels of imbedded systemic risk – with expansive credit creation being only one of the contributors to this issue.
‘Seen the Future is most certainly a daring title for this Quarterly Outlook, but as a mounting number of our respected clients and friends continue asking about “how the entire dilemma could play out,” we will attempt to bring some answers, or at least raise questions that should be asked when prudently allocating money.
One of the most important things to explore is whether we have indeed been moving backwards and if this may continue for some time to come or, alternatively, if the “move forward” has already started.
We realize that we must accept a certain degree of personal and/or professional risk, since our messaging may appear overly concerned, or even negative, at times. In applying an elevated standard of care, as a fiduciary to our clients, we have no choice but to “tell it like it is.” Thus, a broad investment framework on how investors should be positioned will be part of this update.
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