Are Finance Professionals Right To Be Optimistic?

financeWhenever we see or hear of talk surrounding the economy, it is often that we hear politicians asking us to be optimistic about the economic outlook, or promising us that better times are just around the corner.  The response from the public is regularly in the ‘yeah, yeah, we heard it all before’ ballpark, and the television or radio is swiftly switched off, or the newspaper page turned.

However, when finance professionals talk about optimism, should we be paying more attention and looking ahead? This week, many financial analysts have broken cover and said definitively that they expect 2013 to be a great year. Bank of America Merrill Lynch has been one of the most vocal and optimistic ‘big player’ on the global financial scheme, although there have been others.

Is this level of optimism well placed, or just looking forward in hope more than expectation? Recent years have taught us, if nothing else, that it is always better to give lower expectations and then over deliver on what we thought in the first place. Are the positive voices setting everyone up for yet another fall, or do we really have reason to be optimistic about the global economy?

Going for Gold

It is worth noting that much of the optimism from the financial industry is based on their own opinions of how the world should approach 2013, and they believe that companies should be upping investment levels, aggressively pursuing growth, and adopting a more risk-averse approach than they have been doing.

Of course, that all sounds rather exciting, but it is such an attitude that brought us to the place we are at now. We also must remember that the financial backdrop was much more favourable five years ago before the recession began than it is now. If there is some data that suggests the global economy is looking healthier than it has at any time since 2008, then the industry isn’t telling us, instead preferring to make their big predictions without giving the rest of us any background or reasoning.

Europe’s Problem

One big problem, especially for those in America, is the continued poor economic performance being seen across Europe. Only today, despite predictions of better results and proclamations of a new found stability, Eurozone results have delivered a hammer blow to these hopes, falling far short of what was expected.

Yet American based finance firms seem happy to take the word of European politicians that they are on the right track, and want companies to pursue investment on the basis of promises rather than on what the results appear to be showing. It is unclear whether this is a rationalised decision, or whether those based in the US are so desperate for a sustained period of growth that they are adopting a ‘by any means necessary’ outlook.

Should We Be Optimistic?

While the public would be wrong to share the outspoken positivity employed by finance firms, ‘cautiously optimistic’ is probably the best approach to take on a personal level. Prepare for the possibility of things looking up throughout the year, but at the same time recognise that it could still be a long road back to economic prosperity.

Robert is an online content writer with a specific interest in the financial sector, particularly private equity deals and other investment solutions.

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