The assumptions revisited

It seems like an eternity ago that chiefs were out performing with some semblance of conviction, at least some variant of guarded caution, to an expectant audience that always pushed for more. The market watchers were out toying (as liquidity and portfolios can sometimes make one do) with metrics and configurations like these were a kind of tender. That was a while ago, though not so long, before the focus shifted as it has to the assumptions, the assumptions, the assumptions…

(Which can’t be emphasized enough.)

It’s possible to look past certain things, approximate results, or get swept up in the excitement when the funds flow, the IPOs are pricing, and the economy is trending in an upward sloping line. When the economy can be defined and its component pieces somewhat understood, visions may be influenced by keeping up, and the attention to assumptions – their elements, causality, and dynamics – can sometimes trail the outcome, so to speak.

When the mood changes from gain to survival, the focus on assumptions picks up steam. It’s natural that this should happen: for market watchers who now have to look more closely as portfolio positions start to correlate and the liquidity gets questioned, and for the chiefs who might get by without it, learning to depend only on the enterprise that is forever being reinvented.

(This is a welcome thing at every level, I believe.)

The current case is an extreme, perhaps, (I am reminded of a wise investor who once cautioned against thinking of anything as extreme, for it can always be extremer), and the circumstances are unfortunate to say the least. But if there is a silver lining in it all – as there is with the popularizing and advancements of biotech, its methods and innovations – there may be one as well in financial planning and analysis.

The talk of a swoosh shaped economic recovery…

What’s a swoosh anyway? Is it sharp, flat, long, short, wavy?

… and related top-down theorizing and crystal-ball hypnotics…

WSJ

… might start to shift to a bottom-up approach that’s based on direct experience in the individual case, shaping value drivers and metrics that will hopefully get shared for scrutiny, making both the enterprise and markets more efficient and the economy more robust, in the future that is always arriving.