Are budgets really relevant anymore? The picture painted by the budget is never bright. Deficits are here to stay. They always seem to get worse than estimates year after year. Taxes have more or less reached their best possible state. If any, they can only start hurting those who earn a lot. Policy has stabilized and budgets merely reinforce continuity. Welfare is both unaffordable and unavoidable, yet every budget learns to live with more spending. Estimates of every kind get revised when the year ends and mostly distort budgets into comic caricatures. So, of what real use are budgets? Budgets are increasingly seen more as political statements than economic events. The will to take hard decisions, the readiness to acknowledge long-range issues, the efficacy of plans to resolve problems are all judged from the budget. Budgets tell us what our rulers think will make a better tomorrow for us. This budget will also tell us where they see their own tomorrow. And, that would be of great interest to every patriotic citizen.
A smooth sea never made a skilled sailor.
Profits earned in the toughest of times ought to be viewed very differently from profits earned when companies have it easy. Ironically, the markets think otherwise and punish companies in the toughest of times and generously reward them in their happy hours. When costs are high, money is scarce, inflation is peaking, exchange rates are weak and interest rates are high, corporate profits are actually great winnings. Companies that still manage decent growth actually need to be recognised and rewarded. But, the markets do just the opposite. When the worst economic times end and we see a turnaround, the same market rewards the same companies generously. In this idiosyncrasy, big monies are made and lost. One must make his own choice of which profit is more valuable. The one made against all odds or the one which has strong tailwinds?
Watch the bad news closely. Look for turnarounds.