It's been a while since I wrote one of these optimistic and excited "the market's coming back" pieces, but this appears to be the week I'm destined to do it. Despite the fact that it's July in Phoenix, and the current temperature is 114F, there's a sense of excitement (or is it investment?) in the air. The meetings are getting to be fun again, and our entrepreneurs seem to be more able to pay the rent. Some are even speaking to venture capitalists (keep your fingers crossed) and strategic investors. It's as if the Zoloft finally kicked in, and the depression's under control.

The techie mailing lists are once again talking about job opportunities. Networking has risen from the ashes. Social software is all the rage.

And I just received the list of my fellow attendees at the Kauffman Foundation�s FastTrac certification program, for which I leave on Monday. (Definitely overloaded with people from Pittsburgh and Florida. One person from San Francisco, another from Colorado.) There are forty-four attendees, mostly from Small Business Development Centers and women�s centers. These are the facilitators and helpers for small businesses in the cities and towns they come from.
The administrator at the Foundation thinks this is the best certification class she has ever seen, largely because of the geographical distribution. This tells me that almost every state is trying to help its entrepreneurs succeed, connecting them to resources even if they're located outside a specific geography. Since business is global today anyway, this is a good strategy.

But it underscores the complexity of starting a business in the current climate. Although talent is underutilized and plentiful, resources are still scarce. Getting from "here to there," where "there" equals customers and revenues, can take years when bootstrapping is the only available financing scheme.

When I meet my co-conspirators I will want to find out whether all these people who are in training to be facilitators have ever personally started or run businesses. I will be mightily disappointed if it's a room full of bureaucrats, who are always the last to get on any bandwagon. Stay tuned for what I learn next week. If it's all public sector types, I'll know for sure that the market's turned. They always get on when the rest of us are getting off.

Why might the climate have turned around? Unfortunately, I think it's once again because of the stock market. I don't know if you have been courageous enough to read your 401k statements lately, but the market has gone up about 20% this quarter. The NASDAQ, always the high flier, is soaring at about 30% above its previous level. I'm pretty hunkered down in an index fund, but I've still been covering my daily expenses from my stock market profits for the first time in three years.

How can I think this is unfortunate? Because I think we are about to go into another up cycle without much in the way of fundamentals. Yes, the deal flow is better -- there have been some big mergers lately and a couple of IPOs -- but I wouldn't say there is real liquidity. The flow of money isn't into information technology, it's into biotechnology, nannotechnology, and other long-term risky companies. If you look at what securities have gone up the most, it's microcap funds and the stocks inside them. These are little, illiquid companies whose stocks are thinly traded, often manipulated by insiders, not followed by analysts, and not held by institutions. At any moment, the economy could all come down around us again, brought down by things like structural changes in the retail sector (Wal-Mart is the largest employer in many cities, virtually wiping out the supermarket industry,and online shopping is increasing steadily) and the looming crisis in health care costs.

But the public is eager for an upturn, and -- most important -- next year is an election year. Whatever *can* be done to manipulate the economy so George Bush doesn't suffer the defeats of his father *will* be done. It may not make long term sense, but for the next eighteen months, expect to see the worst of the economy's symptoms abate.