ultimate remodeling 8 foot ceiling kitchen remodel elmhurst semi finished basement quality painting and remodeling heritage remodeling hoffman estates .. Chicago Drug testing

Economists

In today's volatile and confusing stock markets everyone is searching for a guru who knows which way the market is going and when. Ask any economist and he will have an answer. Ask 2 economists and you will have 2 answers. Ask 3 economists - ad infinitum.

At the Federal Reserve Board we have Mr. Greenspan and all his economist Governors talking at each other about how to best micromanage the U.S. economy. Notice I said talking at and not talking with. Each one of them thinks he has the Holy Grail and knows exactly what to do. It has not occurred to any of them that doing nothing might be the best for everyone.

On April 27 there was an important economic statistic released. The Employment Cost Index gain was 1.4% which was more than expected by the investment community. This was considered to be negative for the stock market because the Fed is considered to be "anti-prosperity". This number shows more people are being paid more money. Mr. G. thinks this is inflationary. It is a theory he has dreamed up. Going back in history there is no actual correlation showing wage increases cause inflation. This is one of his own pet theories.

When you consider the fact that worker productivity has increased 4 times more than wages have risen it means more to the bottom line profits of corporations. The logic here is very simple. The companies are making more money even though they are paying higher wages and therefore do not have to raise prices on their merchandise. Maybe this is too simple for an economist. If I could make up a really complex formula I might be able to get his attention. Probably not.

This is just one statistic and I know Mr. G. and his money puppets look at hundreds of statistics, but please do not lay inflation on the justifiable wage increases of the workingman.

The base cause of inflation is too much money chasing too few goods. Today we have so much so much competition (goods) it is extremely difficult for almost any company to raise prices. Since profits are increasing 4 times faster than wages most companies will shave profits before they raise prices to their consumers because they do not want to lose their market share.

Large corporations usually have debt. In almost all cases this was money borrowed for plant and equipment. When interest rates rise there is nowhere to offset this cost as there is with wage productivity. This is a cost that ultimately must be passed along. As long as the company has room at the bottom line it can do so. Right now money is expensive, not tight. The Fed wants to slow the economy and it can do it this way because companies will cut back their borrowing for expansion. The economy will slow, but if they keep on doing it they stop everything and that means recession. Their thinking is backwards.

If you want advice on the stock market do not ask an economist.

Al Thomas' 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 at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know.

Copyright 2005

al@mutualfundstrategy.com; 1-888-345-7870

In The News:

Hill of Hope

Just about now everyone is confused as to which way... Read More

How Commodity Trading Differs from Stock Trading

There are major differences between trading stocks and trading futures.... Read More

I Love To Lose Money

Well, not really. What I mean is I don't mind... Read More

Chart Reading

As an investor you will want to check out any... Read More

It Cant Be Done

Wouldn't it be nice if you were only in the... Read More

Mousetrap

The spring-loaded rat catcher is the ultimate low-tech device invented... Read More

Shorting Stocks ? The Basics, Part II of II

After the publication of the first part of this two... Read More

Zero Sum Game

Most people think the stock market is a zero sum... Read More

Lemmings Are Gathering

Before they go over the cliff to their destruction these... Read More

The Stock Market Investor?s Worst Enemy

Every stock market investor faces one primal enemy. An enemy... Read More

Getting Even

I know there are a lot of you out there... Read More

Peer Groups

Whenever I see mutual fund comparisons in the trade publications... Read More

Dont Buy Worldcom! A Guide to Wise Bottom Fishing

Over the past few months, several investment professionals have brought... Read More

Does Japan Matter?

For the last 12 years we have seen the Japanese... Read More

The Golden Goose is Sick

It is finally catching up with them. The brokerage companies... Read More

Dividend Paying Stocks

I would like to share with the reader an article... Read More

Market Success

Who are the successful investors?There are those who follow the... Read More

Staying Sane While Wall Street Crashes

Everybody is riding the Wall Street Roller coaster. Even if... Read More

I Love You, Warren Buffet

Sometime around 1980, can't remember exactly, there was a flight... Read More

Investing in the Stock Market - When To!

Is really not as important as to how you invest... Read More

365/7/24

What does it take to be a stock trader? It... Read More

Choosing A Fund

For years I have been saying you must have a... Read More

Psychology ? How to Reduce Negative Thoughts Relating to Trading?

The thinking process of the brain relating to the... Read More

Struggling Stocks, Booming Commodities

04/28/2005NASDAQ dropped -12.5% year to date in 2005. S&P500 index... Read More

Race Horses and Mutual Funds

For years investors have been taught to look into the... Read More

neptun lighting street light system Pete's produce ..
neptun lighting street light system Pete's produce ..