May 25, 2010 - These are the times that try men's souls. The stock market is making us all work for any positive gains. The breath of hope that saw a 125 point rally on a Friday was extinguished on Monday with a 126 point loss. One day, the market dumped 1000 points before correcting. It's enough to sell all stocks and simply sit on cash. But if you do, you'll miss the next big rally. And there will be more rallies. And the stock market will move above 11,000 again.

You can say "But this time it's different" with good reason: the wars in Iraq and Afghanistan don't seem to have an end in sight. North Korea just severed all ties with South Korea. The U.S. is preparing for the worst in Korea, backing our ally. Gold is hitting new highs, suggesting a flight to hard metal for fear of world chaos and/or a return of inflation. On the home front, new jobs just aren't happening. While home sales were great in April, thanks to the tax credit for new home buyers, no one expects it to be the beginning of a trend as home prices continue to slide and inventories of unsold homes gets ever larger. And don't forget the oil spill. When will that ever end? It all seems to add up to the worst of times.

But, as always, there's good news, if you look. Consumer sentiment is up, even better than analysts predicted. When consumers (which make up almost 70% of GDP) are positive, they spend. When they spend, more products are made, more services required. That means more jobs are created, more homes are sold. In the auto sector, Tesla just formed an alliance with Toyota to build its newest model in an old NUMI plant in Fremont, CA. That will require 1000 new workers. Ford and GM are also both hiring to keep up with demand.

The same is true in much of manufacturing. Going green is the way to sell more. That means making houses from sustainable forests or recycled wood. It means making lightbulbs that take less energy. It means creating packaging that self destructs after so many weeks in a land fill. Change is happening everywhere as humans adapt to the new realities, both economically and environmentally.

We're in the middle of great change. No one knows when the wars will end or how many new ones will start. Mankind has always been at war, for religious reasons, for political reasons. It seems part of nature. Yes, nuclear weapons mean more destruction, but they are not widespread, and countries that have them will be reluctant to use them given the destruction they wreak. As for economic woes currently, they, too, shall pass. Just as the depression passed. Will we see the roaring 90's ever again? Of course, but most likely not in our lifetime. Just as the 20's made its mark, its excess wasn't repeated for 70 years.

But with new ideas, new industries, new approaches in old industries, we will get through all of this. Investors will prosper, the ones that have the patience to hold on through the difficult challenges and own the stocks that are evolving with the new realities. Yes, it's hard right now, just as it was in 2008 and 2009. But there was a huge rally, beginning in March of 2009 that saw the Dow Jones Industrial Average gain 40% before it cooled and had a correction. There was no bell that sounded when that rally began. There won't be one when the next one begins either. You just have to be patient and believe. Over time, believing paid off handsomely for wise investors.

- Ted Allrich