Armageddon Hypochondria

I attended the monthly meeting of the Association for Strategic Planning the other day. Dr. Jim Paulsen, Chief Investment Strategist for Wells Capital Management was the speaker. He topic was to provide an update on the economic and financial markets and provide some insight into this insanity that seems to be reality today. Dr. Paulsen and I grew up in two small towns about five miles apart in southeast Iowa. We both went to the same church in small rural Iowa and both of us attended Iowa State University. I hadn’t seen him in many years and I primarily went to the meeting just to see him and see if he remembered me (he vaguely remembered). And as if I really needed it, I was also interested in hearing one more perspective of what is going on in the world.

His message was different. He laid out a compelling argument and one that is not nearly as loud as the “gloom and doom” message we’re hearing from the politicians and media. Dr. Paulsen peppered his talk with a portfolio of graphs and charts comparing this recession to those in the past showing how this recovery (and he does believe we are in a recovery) is “normal.” He doesn’t ignore the challenges (housing, credit/lending levels, and health care costs) but believes the positive economic indicators (company profits, investment, and manufacturing) are moving exactly as he would expect and ahead of where we’ve been before. He also presented a clip of a 1991magazine article from Time Magazine describing the economic environment we were dealing with. You could paste the same words used back then into any article today and you wouldn’t know the difference- political paralysis, health care costs, rising debt, etc. etc.

Dr. Paulsen believes our country is a victim of “Armageddon Hypochondria.” While the recovery, from an economic perspective, is proceeding as almost every other recovery has in the past, he believes we have become victims to the politics and the media hype creating the feeling of gloom and doom and extremely low levels of confidence we are experiencing today.

The numbers in his presentation all made sense and it was nice to hear someone believe we are doing ok- not perfect, but ok.

“Armageddon Hypochondria” is a dangerous disease especially in rough economic times. The endless political-cycles in this country and the 2012 elections will very likely make the disease grow in the future- especially to the uninformed or susceptible. We also can’t confuse Armageddon Hypochondria with the Brutal Reality of what is happening in our country and in the world. Health care costs are absolutely unsustainable, unemployment levels are unacceptable, middle-class America is shaken, and the hyper-connected global economy has changed the game for everyone. Doing nothing and letting the market “self-medicate itself” (Dr. Paulsen’s prescription for Armageddon Hypochondria) is a standard free-market solution.

Using the past to predict the future is standard operating procedure and makes perfect sense. I just wonder if the world dynamics have fundamentally changed too much over the past five years to provide any reliable predictions to what will happen in the future.

I’ve concluded (self-diagnosis) I don’t have Armageddon Hypochondria- but I do believe if we continue to address critical economic , healthcare, and policy issues as we have in the recent past, we could bring ourselves closer to the edge.

I may have the symptoms- I just don’t have the disease- yet.