It’s All about Sustainability

There has been a great deal of excitement over the stock market’s comeback since March.  Much of the losses that were felt early on in 2009 were erased and some investors are even seeing their portfolios grow, albeit very modestly, in the wake of a summer market advance.  There is quite a bit of caution in the air still and signs of a real recovery are not as evident as many had hoped they would be by mid August.  There is much uncertainty about whether or not the recent bull trend will continue or if the markets will slowly sink back into bear territory heading into the last third of the year.  If investors are still uncertain about where they feel the markets are heading, perhaps it is time to begin to re-evaluate their portfolios based on sustainable growth.  No longer can a market player expect 40% growth in a few short months.  If the recession is slowing and has even ended, as the IMF has recently announced, the name of the game has become sustainability, not quick profits.

In the depths of the recession many Americans lost their jobs, homes, and general sense that many American companies and ideals were too big to fail, too time-honored to be shattered like they were.  Many people began to learn how to live more frugally, more sustainably.  This frugality has created some ripe market fruits for those who know how to harvest wisely.  Companies that have a sustainable growth potential will be the benefactors in the years to come.  The mess that the global recession has created will take years, perhaps decades to clean up, but the companies that can prove to investors that they can be, first and foremost, profitable in this new paradigm, as well as grow responsibly and sustainably, are the ones to watch.

Many of the big investment banks and firms that were once reporting double-digit profits and were considered “too big to fail” are no longer in existence.  Those banks with more conservative business models and customer-service oriented approaches have survived and thrived in an environment where Americans are beginning to save and invest in numbers not seem for generations.  It will be the smaller, more modest service providers and product peddlers that will really take off, and not the luxury product producers, as was the case before the market bubble burst a year and a half ago.

Sure it would have been great to get into the stock market for the first time back in March, when the DJIA hit its bottom and began its slow yet consistent climb back above the 9000 level.  But right now is still a great time to get into the markets as long as investors are cautious and look for sustainable yet consistent growth over mid to long term.  There is still money to be made out there, and even if the recession is not quite done doing its damage, there are still some great plays to be made by any investor.  Focus on sustainable growth and proven profits.