Friday, January 29, 2016

Another view of Wall Street

"It seems there is always and upside and a downside to the market. The upside of higher profits sometimes come at a downside to those on the bottom." 

The corner of Broad and Wall. Where the action is. Not so much for the little guy, but for the not so little guy - you betcha. And why is that? Why does there seem to be such a disconnect these days between Wall Street and Main Street? As Bob Dylan said, "the answer my friend is blowing in the wind". Or, the answer might be found in basic Business 101.

The stock market is up today. The Dow is up over 300 points. I heard on a business show while in the car this afternoon it is primarily due to strong earnings. And that is a good thing. That means many companies today are still being managed well. With an eye on the bottom line. Beat the street as they say. Keep the margins up and the sales growing. 

So if sales are somewhat flat in a down economy, what can a CFO do to squeeze more profit out of the existing sales? Cut costs for a starter. Think of ways to boost efficiency. Do more with less. And sometimes that "less" comes down to doing with less people. And to do that, the ones who remain with the company are expected to pick up the slack from the ones who have been let go. Most of the time that means to work smarter and/or longer. 

The last company I worked for was a wakeup call to me. Like how much things have changed. I was used to somewhat of an "on ramp" after the first day of employment. Starting at the shallow end of the pool until one understood the policies, procedures and skills required to do the job. With this company, it was a 1/2 day of indoctrination and then when I got to my new desk, the in basket needed immediate attention. It was assumed I started from day one with all the skills and know-how needed to do the job as assigned. As a friend of mine told me who also works for a large corporation, "The days of hiring driftwood are over."

Now that I am retired, I have to rely on what I hear from folks still in the workplace as well as what I read on the internet. If a good job is lost due to restructuring, a RIF, or whatever, the job the next job that person finds will probably not be the same in pay and/or benefits. That does not happen all the time, but these days it does happen much too frequently.

For example, average take home pay has stayed somewhat static for a long time. In fact, according to Pew Research, real take home pay (when adjusted for inflation), has barely moved for five decades!

Or to put in another way, according to Moyers and Company, the median household income in 2012 was around $51,000. That was pretty much the same as it was in 1989! The big gains on Wall Street seemed to have passed right over the average family. Someone is getting rich, but it sure ain't them!

So if you have lots of dough in the right stock accounts, pop the corks! Today was a good day on the Street! However for the working stiff, it is just Friday. Friday with a well needed weekend coming up. Time to pop the six pack.

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