Broadening the Investment Horizon

These days when Keith Banks, president of U.S. Trust, speaks to his clients, they report records levels of cash and cash flow. These business owners and CEOs are the "job creators," described Banks, and yet they are not hiring nor spending capital. 

Why?

"A lot of that comes down to continued uncertainty in the environment, not knowing the rules of the game still, and the rules they do know aren't very positive," said Banks during a discussion Thursday morning at the Aspen Ideas Festival on the topic of the current investment climate. 

There is a sense that the business community and investors are watching the "world turn a couple times and see what we have in the next three to six months." Adding to the uncertainty in America is the "fiscal cliff" looming at the end of the year. "Unless some action is taken, we're going to see a rise in taxes and cuts in spending," said Banks.

Nevertheless, there are significant reasons to be optimistic that economic growth is coming -- if investors are willing to broaden their investment horizon beyond six months or even a year, according to Banks. 

For starters, despite the economic slowdown, the typical company in the U.S. is still seeing good profits and in some cases record profits. 

Furthermore, there are two major industries that Banks predicted are likely to grow in the near future: housing and automobiles. 

"As you start to get better job creation, people will still want to own homes," said Banks. "The number of industries that piggy back off that will be enormous." And the automobile industry comes down to one basic, undeniable fact: "The one thing we know is cars get older and eventually don't work," said Banks. Americans are not buying new cars at the moment, but soon enough they will have to. 

Overall, there is a sense that once a modicum of security in the markets and an environment of positivity can be assured, companies will be eager to "get going again," said Banks. "If companies hear that bell ringing, I think there is so much pent up energy, you could see a very rapid uptick in growth."

Indeed, said Banks, his conversations with U.S. Trust clients lead him to believe that America's business executives "are ready."