August 19th, 2010

Becoming A "Go-Ahead" Nation … Again

Please pardon my getting political but since there’s nothing really very interesting or pleasant taking place in the stock market and because this is my blog, I want to get something off my chest.

I’m a history buff (what true chartist wouldn’t be?) because it provides context within which to better understand current events. I recently finished reading, for example, “The First Tycoon: The Epic Life of Cornelius Vanderbilt” by T. J. Stiles (I highly recommend the book to anyone interested in knowing how the United States evolved from a collection of disparate states into a linked nation of commercial interests).

Vanderbilt was an astute young man, unrecognized by the establishment in the 1830’s for his business acumen in applying steam power to river transportation (and later to railroads). The debate at the time was between progressives who saw a need for public investment in transportation and communication infrastructure in order to further territorial expansion and conservatives committed to the traditionally individualistic, independent and agrarian roots of the country.

As described in a PBS special about the Mexican-American War of 1846-48:

“People in the United States [in the 1830’s and 40’s] had a reputation that they were in awe of nothing and nothing could stand in their way. The word was boundlessness — there were no bounds, no limits to what an individual, society, and the nation itself could achieve. There was a reform spirit involved in the spirit of the age. It was a period of tremendous, exciting change.

The period was really the kind of coming of age of the United States, for the American people and their institutions. There were drastic changes in political ways, economic development, and the growth in industrial establishment in this country with technological advances that made individual lives easier than they had ever been before.

One example is the application of steam power to transportation. The United States often times was referred to as a “go-head nation” — a “go-ahead people” with the locomotive almost as a symbol. The railroad became a metaphor for American ingenuity and development.

In printing, the rotary press in 1846 made possible the mass production of newspapers more cheaply than ever before, enabling newspapers to produce for and circulate in the national market rather than just regional or local markets.

Some of the things that were happening bordered on the miraculous, such as the magnetic telegraph in 1844. The very thought of sending words over wires — it just couldn’t be. It was a wonder of the world, even surpassing the application of steam power to transportation on land and sea.

While railroads and communication were the technological sparks for the 19th century, the 20th Century, according to a recent survey of scientists, also had 20 top scientific and technological advances (see Wikipedia):

  1. Electrification
  2. Automobile
  3. Airplane
  4. Water supply and Distribution
  5. Electronics
  6. Radio and Television
  7. Mechanised agriculture
  8. Computers
  9. Telephone
  10. Air Conditioning and Refrigeration
  11. Highways
  12. Spacecraft
  13. Internet
  14. Imaging
  15. Household appliances
  16. Health Technologies
  17. Petroleum and Petrochemical Technologies
  18. Laser and Fiber Optics
  19. Nuclear technologies
  20. Materials science

Whether it was railroads, steel or oil in the 19th century or any of the above developments in the 20th, each represented sparks that drove industrial advancement and, indirectly, the stocks of companies in those industries that lead markets higher.

But what about the 21st Century? So far, there seems to be little leadership in any field, be it technology, business or politics. Since entering the new millennium, our country was attacked for the first time since Pearl Harbor, we’ve been stuck in two wars (the longest in our history), we’ve had two financial bubbles burst and, as a result of one, suffered the worst recession in nearly 70 years. Finally, at the risk of sounding political, the country has been without leadership and direction through two administrations.

No wonder the stock market can’t move ahead. And it won’t until it finds new technologies, new industries, new growth vehicles, new catalyst to spark this century’s “go-ahead” enthusiasm. That’s where the country’s leaders should be focused. Rather than looking out for the interests of minorities (those without health insurance, those who aren’t legal aliens, those who default or are underwater on their mortgages, those who are on unemployment insurance, those who haven’t saved up enough for retirement, those who want to build a mosque near WTC site) – they should focus on the rest of us.

Rather than focusing on the minority, they should fund technological innovation, incentivize capital investment, reward risk taking and innovation, spur hiring in ways that help the majority. That’s what made the country great 1800’s and 1900’s and that’s what will help it not fall too far behind in this century.

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  • The Average Jay

    Very interesting post. Thanks

  • Anonymous

    Joe,,Bill Fleckenstein commentary at moneycentral.com last week relayed a New York Times article that said the U.S Patent Office was in a very sad state of decay..Some 1 million patent applications on hold etc..Small business cant hire and get bank loans without those patents..

  • Anonymous

    technological innovations cannot happen for ever, it has already saturated except medical field. growing economies like china and india are currently creating the demand

  • Anonymous

    you're a chartist, haven't you heard of elliot wave??

  • Anonymous

    We've made a double top the first in 2000 and the second in 2007, we're going down from here… 1930's redone.

    There was leadership and technological innovation back then too, as there is now. Do you understand de-leveraging? and how long this will take?? and the continued impact this will have on the global economy? This does not fix itself in a year or two. It's gotta play out and there is lots more left to come. The can has just been kicked down the road, but it's still there.

  • Tim

    Joe, This may be off topic for this post (by the way I enjoyed it and agree with it, America and it's leaders need to stop kicking the can down the raod and start acting as real leaders do).

    I'm posting my question here since I don't know if posting under a prior post will get you to see it.

    sorry, I only recently found your blog and have bee back reading your posts as I can. Your MTI is fascinating to me and seems very accurate for it's intended puropse.

    After last Thurs the sp-500 closed below it's 300 day moving average and stayed below it on a closing basis friday, 8/20.

    Does this indicate a sell accross the board for the broad markets or am I missing something important.

    I went to cash and bonds at the end of April and stand as of Friday only 7.4% invested in stocks and equity funds.

    The inverse H&S pattern was where I was going to post this but as mentioned was not sure you'd see it. I'm likely wrong about this if so please forgive me.

    With the failure of the sp-500 to remain above the 300 day moving average this has me wondering if the inverse H&S pattern is now out of play and the H&S pattern currently showing on all the major averages is what we should be paying close attention to.

    If I'm reading things correctly a failure of the neckline (some are drawing it at about current levels and others are using the July bottom connecting to the Feb bottom as the neckline. I'm honestly not sure which is correct but both if confirmed would indicate much lower equity prices.

    I'd love to hear your input on how the most recent break below the 300 day MA on the SP-500 affects your MTI and your take on the overall H&S pattern.

    I've also noted a double top making up the right shouldering process and wonder if that adds to the weight of downside pressure (high of both June and Aug.) Does this negative pattern (double top pn the right shoulder) within a negative H&S pattern add anything to the validity of the H&S pattern historically?

    Thanks for your input in advance.

    Tim

  • Tim

    Joe, I'm sorry about all the typo's in the last post. You can delete it and replace it with this corrected version. Next time I'll do better.

    Joe, This may be off topic for this post (by the way I enjoyed it and agree with it, America and it's leaders need to stop kicking the can down the road and start acting as real leaders do).

    I'm posting my question here since I don't know if posting under a prior post will get you to see it.

    sorry, I only recently found your blog and have been back reading your posts as I can. Your MTI is fascinating to me and seems very accurate for it's intended purpose.

    After last Thurs. the sp-500 closed below it's 300 day moving average and stayed below it on a closing basis friday, 8/20.

    Does this indicate a sell across the board for the broad markets or am I missing something important.

    I went to cash and bonds at the end of April and stand as of Friday only 7.4% invested in stocks and equity funds.

    The inverse H&S pattern was where I was going to post this but as
    mentioned was not sure you'd see it. I'm likely wrong about this if so please forgive me.

    With the failure of the sp-500 to remain above the 300 day moving
    average this has me wondering if the inverse H&S pattern is now out of play and the H&S pattern currently showing on all the major averages is what we should be paying close attention to.

    If I'm reading things correctly a failure of the neckline (some are
    drawing it at about current levels connecting to the Feb. bottom and others are using the July bottom connecting to the Feb. bottom as the neckline).

    I'm honestly not sure which is correct but both if confirmed would indicate much lower equity
    prices.

    I'd love to hear your input on how the most recent break below the 300
    day MA on the SP-500 affects your MTI and your take on the overall H&S pattern.

    I've also noted a double top making up the right shouldering process and wonder if that adds to the weight of downside pressure (high of both June and Aug.) Does this negative pattern (double top on the right shoulder) within a negative H&S pattern add anything to the validity of the H&S pattern historically?

    Thanks for your input in advance.

  • Anonymous

    Social Darwinism went out of favor with child labor laws, womens right to vote, and the abolition of slavery.

  • Anonymous

    Thailand Mkt Index all time high…what is happenning there??

  • Anonymous

    Hooray for you and your opinions ! Experience counts when it comes to being a leader and recognizing the need to not be opressive to innovation.

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