Good News: Starbucks Increases Number of Stores, Allstate Makes Q4 Underwriting Profit

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4 February 2009
Donald Light
Really? Is Light making this stuff up? How could this be? I mean, like, what happened to the financial crisis thing? I am not making this stuff up. Both headlines are true. And the way this happens is that Starbucks and Allstate are both pretty good companies, run by smart people, who sell things people want to buy at a price that exceeds the cost of providing them. The financial crisis, along with the way news is created, is the reason you haven’t been reading these (true) headlines. Light’s first law of the media: bad news crowds out the good. Light’s second law of the media: good news is a feature story, not news. Light’s third law of the media: if it’s not about the financial crisis, it’s not really happening. I concede: the financial crisis is real—and showing no signs of becoming less unpredictable and scary. Starbucks is closing stores and laying off staff. But having added 2,500 outlets two years ago, it will end its fiscal year with 95 more than it started. And Allstate’s underwriting results have deteriorated (estimated Q4 combined ratio of 96.4 being only a bit worse than the 2007 Q4 of 95.9, and full year 2008 of 99.4 vs. 2007 89.8—but darn it, they are still in the black. Recovery will come, based on the economic and human forces that have never departed. And, optimistically, maybe even helped by a few deviations from Light’s three laws.

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