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Politics : Ask Michael Burke

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To: BGR who wrote (76064)	2/17/2000 5:35:00 PM
From: Freedom Fighter	Read Replies (1) of 132070

BGR, On a serious note, several years ago I did a statistical study on the PPI, CPI, GDP Deflator, interest rates and stock prices. I came to the conclusion that there is greater relationship between inflation and stock prices than there is between interest rates and stock prices. Not too long after that the Fed produced a more comprehensive report that came to the same conclusion. As a result, I built a bunch of valuation models for myself that incorporated a real rate + inflation to complement my interest rate models. Since that time I've come across a few very persuasive reports that demonstrated that the current administration is cooking the books on GDP, productivity and inflation. I have since stopped using the inflation models and anything that made estimates for long term economic growth. At least with interest rates I know I am dealing with a real alternative for my investment dollars. I think most serious investors would be better off if they just ignored all government data. The PPI and CPI are for the showbiz types on CNBS and the politicians who want to raise taxes and cut spending without signing their name to a bill that voters can hold them accountable for. (ng) Wayne

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