Bajtelsmit Column: Looking on the Bright Side

Note to Editors: Vickie Bajtelsmit is a finance professor in the Colorado State University College of Business and the author of three personal finance books.

I’ll admit it–I’m an eternal optimist.  That infernal song from the musical "Annie" could be my theme song-I won’t even mention its name lest half of you spend the rest of the day singing it uncontrollably.  I am one of those people for whom the glass is always half full.

Are there any other optimists out there who are tired of hearing all the "doom and gloom" in the news lately? As time goes on, it seems there are fewer and fewer of us. Before you know it, people will be recommending that we take part in a 12-step program to get over our addiction to positivity.

Even I will admit, however, that it’s getting harder and harder to be an optimist about the current economic climate. For the last few months, it seems that every day, I hear more bad news. The global economy is in a turmoil the likes of which I haven’t seen in my lifetime. Every day, my retirement account balance creeps – on some days, races – downwards.

An interesting aspect of what is happening in today’s markets is that collective opinion–optimism or, in this case, pessimism, plays a big role. As long as the consensus view is negative, people cut back spending, businesses then have lower revenue and profits. This, in turn, leads to layoffs and lower stock returns. It’s a vicious cycle, given that the stock market decline is largely responsible for consumers’ pessimistic attitudes and cutbacks in spending in the first place.

So with all this negative karma, how can an optimist keep a sunny outlook without getting ridiculed at the water cooler? I see much to be optimistic about and continue to believe that this will not be a prolonged recession. For those of you looking for a ray of sunshine in advance of the Thanksgiving holidays, here are a few:   

Interest rates on mortgages and car loans continue to be quite low by historical standards. My first mortgage during the recession of the early 1980s was at 13.5% and that was a very good rate at the time.  Today, I could get one at 6%. The fact that some borrowers can’t get credit is a good thing. Too much borrowing is partly responsible for the mess we are in today.

If you are in the market to buy a house or a car, prices and terms are quite attractive. The sellers are not making out so well, but keep in mind that whatever they are buying to replace what they are selling will also be a bargain.

The prospects for growth in the stock market over the next few years are terrific.  Many experts had warned that stocks were overvalued, but with this current "correction," many good companies are selling at bargain basement prices. If you continue to put your money to work through retirement accounts or other saving, it will eventually grow. This might not be tomorrow or next month. But it will happen.

Lastly, I suggest you take the time to remind yourself of the reasons you enjoy your current job and co-workers. I do this on a regular basis and have decided that working for a few more years than originally planned will be just fine with me.