photo credit: nakedsky

2008 saw a lot of stunning, almost apocalyptic events. People ask, “What else could possibly go wrong?” The prevailing view seems to be that the economy will get worse before it gets better. As we look out on the year ahead, it is easy to conclude that there are only storm clouds on the economic horizon. So, what are we to think when people start interpreting bad news as good?

A person I recently had coffee with remarked, “The best news I’ve heard lately is that the recession started a year ago.” Her point was that we might already be at least halfway through the downturn. While it may be a bit early for outright optimism, I see several positives that could benefit investors in the year ahead. These are the incoming Obama administration, the lessons learned from past market catastrophes, and the prevailing negative psychology of investors. The last point refers to the notion that once everyone expects bad news, it can actually be good for the markets.

Though November now seems like a long time ago, I still recall the feelings of hope and elation people had following the election of Barack Obama. His victory felt like the first step into a more promising future while also marking a decisive conclusion to the last few dismal years. Read more »