fwiw-HOW TO PROFIT FROM THE GREAT BOOM AHEAD
Prepared by Donald H. Rowe, The Wall Street Digest
(November 2003) There has been an unusual change in economic policy in Washington, a "sea of change" that has created unusual investment opportunities. One CNBC anchor discussing this change said, "It has created the finest economic recovery money can buy." President Bush, Congress, and Fed Chairman Greenspan have all done their part to create a strong and rapid economic recovery.
They have, in fact, overdone it: America is now floating in a sea of money.
Japan and Europe have also begun to reflate their economies. Fed Governor Ben Bernanke said that he is seeing economic growth reports in the 4.7 percent to 6 percent range for the third and fourth quarters of 2003. Investors have also been told that third and fourth quarter earnings would be up 20 percent over last year!
On several occasions, Greenspan has promised members of Congress, investors, and consumers that interest rates will stay as low as possible--for as long as necessary.
The Fed has never, ever been that open and direct! One Fed governor said, "We are targeting job creation." Wall Street Pros tell me privately that they are unusually optimistic about the profits they expect to generate from an economic recovery that "you will see in the second-half of 2003." The Wall Street Pros are using a three-point investment strategy to capture profits for their personal accounts.
I modified this three-point strategy for the individual investor and published it in the October issue of The Wall Street Digest.
These large investors are the ultimate insiders with billions to invest. They do not listen to the stock analysts (cheerleaders for stocks), nor do they listen to the chief market strategists for the big brokerage firms. When was the last time you heard Abbey Joseph Cohen, Gale Dudac or Joe Battipaglia put their spin on the stock market? Stock brokers have to do what management tells them to do.
Numerous stock analysts who lied to you (e.g., Henry Blodgett of Merrill Lynch and Jack Grubman of Goldman Sachs), have been gagged and hidden from the public.
Smarting from the mistakes during the last bull market, Wall Street brokerage companies now have a new strategy. Stock brokers from the big brokerage firms have told numerous Wall Street Digest subscribers that they have no interest in selling Wall Street Digest recommended stocks to them.
Their new pitch is: "I can help you make more money by managing your money or by selling our brokerage company mutual funds to you." Who are they kidding?
They lost $7.5 trillion for their clients in 2000, 2001, and 2002! And now they want to manage your money? Even worse, why would you want to purchase brokerage company mutual funds that are still underperforming the stock market? Morgan Stanley was just fined millions of dollars for the improper sale of Morgan Stanley mutual funds.
Remember Morgan Stanley's "rah-rah" technology analyst, Mary Meeker? Are they are still at it, one client at a time?
You will generate far more profits using our modified, three-point investment strategies of the Wall Street Pros--those who are never on the wrong side of the market. While conducting an "Investment Seminar at Sea" on the Crystal Symphony, I answered personal investment questions continuously for ten days and learned how disenchanted most investors have become with the large brokerage companies.
Just listening to these investors' questions and their frustration of dealing with the large, well-known brokerage houses was an education.
I am acutely aware that you need the most honest and reliable investment information you can find today. The analysts and the brokerage companies that mislead you down the wrong path and never tell you when to sell anything are always going to be a problem for you. Investors tell me they have come to the conclusion that many people on Wall Street and in the numerous big brokerage houses are simply using them.
And they are: They are using you and your money to make a fortune in brokerage fees, sales fees, and money management fees.
And, of course, you are billed for these fees even when they are losing your money! On the other hand, you can implement our investment strategies without using a big brokerage company and save money on brokerage commissions, as well. You should become fully invested immediately using the three-point investment strategies presented in the October issue of The Wall Street Digest.
Here's why: First, the Wall Street insiders and market makers are convinced that the Great Bull Market of 2003-2009 is underway.
This is not just a bear market rally as many claim. On page one, I mentioned "the finest economic recovery money can buy." At this moment in time, the White House, Congress, and the Fed are all firmly united with unprecedented economic stimulation to produce a rapid economic recovery. Why are all three in rare agreement?
The president, all 435 members of the House and one-third of the Senate would like to be re-elected in November of 2004.
Fed Chairman Greenspan has informed President Bush that he would like to be reappointed for another term as Fed chairman. Greenspan will be 78-years old when his current term expires in the summer of 2004. Nevertheless, he would like to become the longest serving chairman of the Federal Reserve. To achieve that milestone, he must serve at least another year as Fed chairman after his current term expires.
All of these ambitious and powerful economic players are smart enough to know that achieving re-election (or reappointment, in Greenspan's case) will be far more likely if the economy is growing rapidly (five or six percent in 2004), and creating at least 100,000 new jobs month-after-month during 2004.
Job insurance for all of these politicians would be a stock market that posts record new highs before Election Day 2004.
Investors and consumers who own stocks and mutual funds or those who participate in company or state government pension plans will feel far more financially secure and, thus, far more willing to vote for the incumbent office holder with the Dow Industrial Average at a record high of 12,000 by Election Day.
Greenspan has another important responsibility: Keep real estate prices rising by maintaining low interest rates and by pushing ample low-cost mortgage money into the banking system.
This will help homeowners sell the largest (for sale) inventory of million-dollar-plus homes in American history. Why is there such a large inventory of million-dollar homes for sale? Because equity investors lost $7.5 trillion during the three-year Greenspan Recession of 2000-2002!
If you were heavily invested in the stock market and listened to stock analysts during 2000-2002, your home is probably for sale.
Even worse, you probably have few lookers and no offers to buy your million-dollar-plus home. You need low interest rates and a solid economic recovery to lift consumer confidence. Yes, Mr. Greenspan is listening. Congress and the White House are listening, too. They have been overwhelmed with complaints about China and the loss of manufacturing jobs and, more importantly entire manufacturing companies.
What specifically have these politicians done to create an economic boom and bull market to insure their reelection in November 2004?
1) The White House: President Bush pushed two tax cuts through Congress. The most recent tax cut was the third largest in history. Tax cuts always create faster economic growth; faster economic growth always creates more jobs. Taxpayers rushed out and spent their tax refund checks in July, August, and September.
Retail sales jumped impressively and home sales soared to record levels! Semiconductor sales jumped 10.5 percent in July and 12.5 percent in August!
Early October retail sales are very impressive. 2) Congress: While members of both houses of Congress reminded us almost daily of how irresponsible it was to spend $500 billion in red ink during the past year or so, they still approved virtually every spending bill they reviewed! Now, why would Congress do something so irresponsible?
That's easy: Deficit spending always creates faster economic growth; faster economic growth always creates more jobs!
Five hundred billion dollars of red ink is a huge and powerful economic stimulus. In 27 years of publishing The Wall Street Digest, I have never seen so much deficit spending in such a short period of time with so little debate! Don't you find it interesting that after the money was so quickly spent and with so little debate, members of Congress are now lecturing their constituents on the sins of red ink?
An economic boom is on the way! It will arrive well before Election Day! Stock prices are going to soar!
3) Fed Chairman Greenspan has been creating money at the fastest pace in history. At $20 billion of new M3 money per week, Greenspan could create more than one trillion dollars by Election Day. So that you have a full appreciation of the economic boom and bull market that is coming, let's take a moment to review what Greenspan did for President Clinton:
Chairman Greenspan created more money for President Clinton than all of the money created by all other Fed chairmen combined! That's a lot of money!
That money creation resulted in a record economic boom and the 1995-2000 bull market. During 2000, 2001, and 2002, Greenspan created very little new money. The net result was three years of economic malaise because the economy was starved for money. Now that he wants another term as Fed Chairman, Mr. Greenspan is far more amenable to creating new money at a much faster pace.
He knows he will have to create a strong economic recovery and bull market if he expects President Bush to reappoint him to another term in the summer of 2004.
He doesn't have a lot of time to turn things around. Hence, the current pace of new money creation. And that is why the Wall Street Pros and the Wall Street insiders are expecting a rapid economic recovery in the second half of 2003 and another economic boom and bull market during 2004.
Bear with me for a minute while I share a few more things that the Pros and the Smart Money clearly understand, but the individual investor hasn't a clue about.
4) $6.5 trillion cash on the sidelines. When the 1995-2000 bull market began, only $2.8 trillion was on the sidelines. This incredible record pile of cash is slowly moving into the stock market, pushing it higher and higher. As we go to press, the Dow is up 30 percent since the 3/12/03 bottom; the NASDAQ is up 52 percent; and the Russell 2000 Small-Cap Index is up 53 percent.
5) The lowest interest rates in 45 years. Fed Chairman Greenspan says he will keep interest rates as low as possible for as long as necessary.
I am sure he will: Otherwise, he will retire in 2004 with the "Greenspan Recession" to haunt him during his golden years! Even more important, bond yields have no place to go but up. So smart investors are not buying bonds; they are buying stocks. 6) The professional traders of the S&P 500 Futures contracts are net-long for the first time since March of 2000.
They went net-short in March 2000 and stayed net-short for three years.
The net result? The S&P 500 was down 10.1 percent in 2000; down 13.1 percent in 2001; and down 23.3 percent in 2002. They are now net-long and the stock market is up for the first time in three years. And don't forget: The Wall Street Pros are never on the wrong side of the market. Perhaps that is why they are often called "market makers."
7) Junk bond prices always soar just before an economic recovery begins. Why? Because there is less bond market risk as economic growth accelerates.
Junk bond prices have soared and the economy is rapidly recovering. Keep in mind that employment is a lagging indicator and is usually the last to recover. Watch the Thursday jobs report closely. Layoffs are declining, as are new claims for unemployment. That's bullish!
However, each time the Friday jobs report shows a creation of 25,000 or 50,000 jobs, the bond market has a very bad day, while stock prices soar!
Bond prices will plunge (yields will rise) due to a healthier economy. How fast the bond market crash unfolds depends on how fast the economic recovery creates jobs. The bond market is going to crash because Fed Chairman Greenspan is going to create an economic boom to make sure people forget about the three-year Greenspan Recession!
Keep in mind: Recessions don't just happen; the Fed creates them to kill inflationary pressures. Economic booms don't just happen; they, too, are created by the Fed.
An economic boom is a deliberate decision by the Fed! They are planned by the Fed and they are implemented with low interest rates and a flood of new money from the Fed. As a result, the Smart Money and Wall Street insiders are quietly selling bonds and buying stocks. They see clearly what is happening and know what is coming. Investors have sold $100 billion in bond mutual funds this year!
You should also sell bonds. Yields are going to rise and bond prices will tumble as the economic recovery gains momentum. It absolutely will happen!
Never, ever bet against the Fed--and especially this Fed chairman. The same day bond prices plunge, stock prices will soar in celebration of job creation! 8) The Ten-Year Phenomenon. Except for the Wall Street Pros and the Smart Money, most people are not familiar with the "ten year market phenomenon."
No one talks about it because no one can explain why it occurs every ten years; it just does! Here is what the "ten year phenomenon" is all about:
Do you remember:
The recession and bear market of 1970-1971-1972?
The recession and bear market of 1980-1981-1982?
The recession and bear market of 1990-1991-1992?
The recession and bear market of 2000-2001-2002?
The Wall Street Pros and the Smart Money are convinced that the Great Bull Market of 2003-2009 is underway! Keep in mind: For the past fifty years, the three best months for the stock market have been November, December, and January. Add February, March, and April and you have the best six months of the year to generate profits. Using our three-point investment strategy, you should be fully invested in our recommended stocks and mutual funds right now.
The next six months should be the best six months investors have seen in a long time. Don't miss it! Enjoy it! |
