Personally, I think the stock market and the broader economy are close to establishing a new equilibrium. The question is: what will that new equilibrium look like?
The tentative answer: quite different from what we're all used to, especially in the use of leverage to boost earnings and asset values. Financial service firms, industrial giants and consumers alike are waking up with a massive, pounding, risk-fleeing hangover. I believe the cure - a headlong flight AWAY from leverage - is likely to be long-lasting and have a pervasive impact on many organization's growth prospects and strategies.
Here's a summary of recent industry trends from the American Hospital Association, as reported in Yahoo News.
What effect might all this have on the strategies of health care providers?
Lower debt-to-capitalization ratios?
Lower returns on investment portfolios, just when providers most need the funds?
A renewed focus on liquidity and the ability to fund capital spending from current earnings and cash flows?
A slowdown in capital spending as debt markets become more conservative and earnings, cash flows and investment earnings are insufficient to fill the gap?
All of the above? None of the above? Stay tuned.