Ken Heebner On The Economy

A recent interview in the Boston Globe gave  a small insight into what superstar fund manager Ken Heebner thinks about the economy.

First of all, from what I have read there is a split among “gurus” as to where we are in the economy. Some like Warren Buffett, believe tough times are ahead. Others like Ken Heebner, believe we have gone through the worst.

There’s a lot of pessimism about the economy. What’s your take?
My view of the world is quite different. I think people are very concerned about our economy, they’re starting to realize there could be higher inflation to come. The consensus is that we’ll bring the rest of the world into our recession. But my view is we’ve probably seen the weakest period of economic activity. The economy may not be robust in the next year, but it’s seen its low point and at some point will move higher.

I hope so! I have not made public what I do besides going to school and visiting investing sites. About one year ago, my father purchased the business he had worked for the past 25-30 years ago.  My father had always wanted to own his own business and the opportunity was right. Basically, I handle operations, while he provides his knowledge. We are in a business where we are heavily dependent on steel prices and the housing industry. Sounds fun eh? What’s even better is we bought the business at the same time housing peaked. Now, if there’s someone out there who can tell you about the economy and anything related to the chemical business I might be that person.

My Take On The Economy
Its bad out there. March and April were the worst months I have been in. We were in the red (I handle accounting) and cut our working hours by half. If my father and I did not believe in job cuts, without a doubt our employee(s) would not have a job. Starting in late April, things started to pick up and we had our best months in May and June. So far July has started off really bad but that could change as I am close to closing a big job. Now, I have the opportunity to talk with many businesses and delivery drivers and everyone says the same thing; “things are bad and there are no signs of light:. I honestly believe if we did not have outstanding numbers in May and June, we would be out of business. And this is coming from a business with an estimated 90% of the Southern California market.

What The Fed Needs To Do

The Fed needs to lower these [expletive] commodity prices. It’s tough to sell something when the price of steel keeps going up every day! Our monthly fuel bill used to be in the neighborhood of $350. Now its $850-$900. I know its peanuts compared to some other business but the impact is the same. I was considering investing in new machinery but the increase in fuel has put those plans aside. Everything and I mean everything is being affected by rising fuel prices. Everyone I know wants to invest and expand in their business but with high commodity prices, it’s nearly impossible. Its like trying to swim with handcuffs on, you will not go very far.

The Future

Nevertheless, I know from personal observations, Americans are some of the best workers around. Despite every bad headline, we still get up and go to work and do something productive. I hope this slowdown will be over sooner rather than later but we need every help we can get, starting with high commodity prices.

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