The Importance of Internal Consistency

By: Ian Campbell | Thu, Aug 16, 2012
Print Email

Why read: To test the contemporaneous views I expressed four years ago, to observe similarities and differences then and now, and to determine if you agree with my current views.

Commentary then: On April 1, 2009 I commented as follows:

An article March 31, 2009 titled 'Record drop in home prices keeps U.S. consumers glum' says:

The article also reports that U.S. consumer confidence rose slightly to 26.0 in March (from February), only 2% of Americans said they intended to buy a home in the next six months (the weakest reading since 1982), and car-buying intentions fell sharply.

Articles this morning (2009) then reported 'Manufacturing index shows contraction in March', saying the U.S. manufacturing sector contracted for the 14th straight month in March, but at a slower pace than expected - and that the number of unemployed people in the manufacturing sector in February rose to 1.8 million -- or 11.5% of that work force -- from 820,000, or 5% from a year earlier.

The article did say a handful of industries expect to benefit from the government's economic stimulus measures, reporting;

I don't see any of this as particularly encouraging. That said, I consider 'internal consistency' between data and conclusions to be of paramount importance, and don't understand how anyone could conclude that a combination of further manufacturing contraction, a further drop in home prices, a reduction in construction spending, and an increase in pending existing home sales (still down from one year ago) ought to result in an increase in public company share prices as measured by a stock index.

Commentary now: I have found the financial markets very confusing from March 2009 when they began to recovery. I continue to find them confusing. As I have said several times in these Newsletters:

I certainly can't claim to 'time the markets', but for me they have been disconnected for some time now.



Ian Campbell

Author: Ian Campbell

Ian R. Campbell, FCA, FCBV
Economic Straight Talk

Through the Economic Straight Talk Newsletter Ian R. Campbell shares his perspective on the world economy, the financial markets, and natural resources. A recognized business valuation authority, he founded Toronto based Campbell Valuation Partners (1976), Stock Research Portal (2007) a source of resource companies market data and analytic tools, and Economic Straight Talk (2012). The CICBV* annually funds business valuation research in his name**. Contact him at
* Canadian Institute of Chartered Business Valuators
** through The Ian R. Campbell Research Initiative

The full version of The Economic Straight Talk Newsletter is published each trading day. To get your Free 14-day trial subscription, visit No obligation or credit card required.

Informed Investors are Successful Investors

Comments and opinions expressed in these commentaries are those of the authors. They do not constitute individualized investment advice, are provided "as is", may change without prior notice, and are used at your own risk. The information and content provided or referenced may be incomplete, inexact, or incorrect. Your use of these commentaries is subject to the Economic Straight Talk Terms of Use and Legal Disclaimer

Copyright © 2011-2013, Stock Research DD Inc., all rights reserved

All Images, XHTML Renderings, and Source Code Copyright ©