WSJ.com - The Evening Wrap

WSJ.com - The Evening Wrap

ECONOMIC BOOM!

The economic boom, written about in the Wall Street Journal, is powerful. High paying job growth, booming exports, and growth across most industries. The best news is that the strong growth is concurrent with low inflation!

The strong growth implies that long term interest rates will rise; the low inflation numbers imply that the rise will be moderate. The recent strength in the stock market has been accompanied with an increase in long rates. Our SOW portfolio has done very well while the recent increase in rates has pushed the equivalent bond portfolio down.

Just a short time ago, I convinced a friend to replace the bond portion of his IRA with AAA grade high yield stocks. The payoff is already apparent. Stocks perform well during economic growth--bonds do not. One must expect interest rates to creep up during an economic boom; same with the cost of fuel. Higher interest and higher fuel are simply a part of the costs of doing business. Were our resources stretched thin one would expect higher inflation. The world continues to export jobs to under-employed nations. The world wide standard of living is making progress and Americans are saving billions on their purchases.

After a few years of boom, resource utilization will grow tight and it will be time to grow cautious. This will be a time when all know how strong the economy is. For now, those who recognize the strength early will be able to take advantage and make serious money long before the crowd arrives.

BUY THE BULL! OUR ACCOUNTS HAVE LONG PASSED THEIR OLD HIGHS! WE ARE IN PROFIT LAND! THE STAMPEED WILL CONTINUE!