Blog

30
Jan

Recession Fears Sweep Global Markets

During 2018 equity markets in Europe and Asia were down in the 15% plus range while those in the US lost roughly 5 percent. In this milieu, the Global LAMP Index® and Focus Group lost 10.52% and 7.72% respectively; and the comparable FTSE World and MSCI World indices lost 9.57% and 10.44 percent. More importantly, over LAMP’s longer 24-year history it remains far ahead of all peer global market indices.

Global recession concerns are today centered on the huge amount of debt and unfunded liabilities piling up in the world’s four biggest economies (US, China, the European Union and Japan). Since the 2008/9 global financial crisis these have grown considerably faster than GDPs. This presents major challenges for companies because such liabilities create a drag on economies and market demand for their goods and services.

To ameliorate that drag, the central banks of these economies have printed money and lowered interest rates in hopes of keeping demand alive. Although this worked for nearly a decade, 2018 may have marked a turning point where such artificial respiration is no longer sufficient to boost the economy and stocks.

This ever-growing burden of debt puts a spotlight on one of the shared attributes of the Global LAMP Index®. Frugality was a prime consideration for selecting companies into the Index – with particular focus on their uses of debt and materials derived from Nature. This attribute gives companies extraordinary resilience at a time when rising debt/GDP ratios and ecological overstep have become more pressing economic costs.

The Global LAMP Index® today is virtually identical to the one that launched my 2006 book, Profit For Life. With the exception of six name changes, due primarily to mergers and acquisitions, its composition has barely changed. That’s because the Index is a “learning lab” whose purpose is to test the long-term durability of corporate cultures in companies that mimic life (as described in this website).

The Focus Group, created in 2014, comprises 7 companies from the larger Index that best model this life-mimicking paradigm. The evolution of these companies to higher levels of stewardship became the foundation of Companies That Mimic Life, which was published in 2016.

Bottom line: companies that mimic life have major advantages over those that operate on the more traditional industrial capitalist model. Because they work in harmony with life, rather than exploiting people and Nature in order to grow GDP and profit, they inspire employees to work with their hearts as well as their minds. That is the source of their extraordinary operating leverage and shareholder returns.











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