In many areas of the country, attitudes are now as negative as they were in 1986. That's the mood I've seen after speaking at 36 conferences the past couple months.
Overall, financial times certainly are not as difficult as they were in 1986. But combined with low yields in certain areas of the country and commodity prices less than what many people want, add one more negative ingredient to the apple cart and it may just tip over. That ingredient for negative attitudes has been the corruption of corporate America and the distrust that many farmers and non-farmers alike have for the leaders of corporations.
Three or four years ago, many news stories featured young kids right out of college who started dot-com companies, took them public and made millions of dollars. This past summer the headlines centered on corporate corruption in firms such as Enron and WorldCom. There were also articles demanding that we have new accounting principles to keep such corruption from happening again. What we all know is that new “accounting principles” aren't what's needed. What we need are business leaders who have principles — period.
Markets may sometimes be very difficult to predict, but people are very predictable. The emotions of greed, hope and fear will always be alive and well.
It was nothing other than pure greed that compelled top executives to “cook the books” for the betterment of their own balance sheets and income statements, and to the detriment of their stockholders and employees. But it was also greed that compelled many investors to buy stock in those same companies because there was “no way” prices could go down.
Many individuals were buying stocks when they had never owned a stock in their life. That may be a clue in the farmland market as we are now witnessing many first-time buyers.
Here are several thoughts on the current state of the economy:
Rural America is more upset than ever at corporate America. A few “bad apples” have ruined the lives of many employees and investors associated with these few companies.
Those who are upset, however, should be very careful about condemning the entire corporate world and those who run it. There are many good companies run by some very good people. To throw all of corporate America into one basket is no different than those from the city classifying all farmers as one and the same.
It's going to take a long time to heal some of these wounds. Because of that, it's going to take a long time for the stock market to show any recovery.
Markets always go to extremes, whether it's a corn or a stock market. The stock market went to extreme highs three years ago and extreme lows last October. Odds highly favor that the stock market has seen the lowest prices it's going to see for several years, but may well never take out the highs posted in March of 2000.
Be slow to condemn all of corporate America for the sins of the few. Current events show that few, if any, individuals are immune from greed. As we go through these emotional cycles in stock markets and in commodity markets, people will always say, “this one is going to be different.” Every market is a little different — but the results are normally the same.
Richard A. Brock is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report. For a trial subscription and information on Brock services, call 800-558-3431 or visit www.brockreport.com.