QUARTERLY LETTER

Published Second Quarter 1996
Muhlenkamp Memorandum 38

Three months ago we reviewed our perspective on the current investment climate, seasons and weather (the long term, inter-mediate term and short term). None of it has changed. The long-term investment climate remains very positive, the intermediate term is quite positive and the short term is choppy. We also reviewed some of the items in the news (Bosnia, Whitewater, etc.) that the media and the pundits might find to worry about. Today we'll add one more item to the list. That item is inflation and the fear that economic growth causes inflation. The past 30 years have proved this fear is groundless, but few economists have changed their minds as a result of the evidence. It is hard to call economics a science when practitioners deny the outcome of experiments such as we have witnessed in the past 30 years.

One more point. Most of the public knows that the TV news media look for drama in their news stories. But the public doesn't yet seem to appreciate that the print media (of all types) also look for drama. I often get questions from the media concerning my thoughts on some news event. Over the years, I have learned that if I predict a disaster, I'll get quoted. If I say the news is great, I might get quoted. If I say it doesn't matter very much, I won't get quoted.

Conclusion: To get quoted, predict disaster. Often, the people who are quoted are those who make dramatic predictions, not necessarily those who know something.

Read our quarterly newsletter, Muhlenkamp Memorandum, for more by Ron Muhlenkamp.