By Al Thomas
The pretty cheerleaders on CNBC-TV are worried.
Much of the talk on Wall Street, especially among the the TV guests, is about the coming recession and even the possibility of the “d” word (depression).
Martin Weiss, the perennial bear, will give you a thousand (well almost) reasons why the U.S. and the world is in big trouble and every investor should be thinking about methods to protect his portfolio from the coming bear market. His Daddy was right and his Grandpa was right, but Martin is going to have to wait a while to be right.
Every broker, analyst, economist and investor knows about the calamity In the housing market. They also know interest rates are rising for mortgages. It will be tougher to qualify even for those with good credit. Employment statistics though good are not healthy. Consumer sentiment took a recent nosedive showing lack of confidence in the economy. Investor sentiment is bearish with that Indicator, the VIX, running in the 20’s. and on and on.
Is there any ray of sunshine that can bull the market?
First, the psychology of the market should be appraised. If all this bad news has not been able to break the market 10% there must be something holding it up. Remember, it is not the news that is important, but the reaction to the news. If all the recent known bad news could not take the market down then it will continue on up. But why?
The U.S. population of 300 million has been the world’s largest consumer. BUT if our economy slows this could and would hurt every country that sells us goods of any kind. Seventy percent (70%) of our GDP (Gross Domestic Product – that’s all the stuff we buy and consume) could drop by one or or three percentage points it will affect everyone.
Currently there is excess production capacity world wide. Manufacturers have sprung up in all of Asia, South America and Eastern Europe that can produce quality merchandise at competitive retail prices. Service businesses are undercutting us with access through the Internet.
What the world needs is another group of consumers to keep commerce rolling at high speed.
And they are coming on line.
The world needs another group like our 300,000,000 consumers. China has 1,300,000,000 total population. Forget the one billion; They don’t count. Those 300,000,000 don’t pull rickshaws and wear bamboo sandals. They now crave Mercedes Benz autos and Gucci patent leather shoes. There are now thousands of millionaires in China and other Asian countries.
They may not like U.S. policies, but they love the US life style.
This is what the stock market sees. The market knows more than all the analysts and economist put together. Those who listen to the voice of the market will become very rich. It is now telling in a very clear voice, “I am going higher”.
Global consumption is going to continue to grow which will bull the stock markets.
Al Thomas' best selling book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter and receive his market letter at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know. Copyright 2007 All rights reserved
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