-- Posted Friday, 16 December 2005 | Digg This Article

Rick’s Picks

Friday, December 16, 2005

For investors who’d rather be smart than lucky 

With shares of Altria up by nearly four percent yesterday on favorable tobacco-suit news, the Dow Industrials still managed to close down on the day. Go figure. Sage observers attributed the market’s skittishness to investors’ concern that a supposedly robust economy might kick inflation into a higher gear. Indeed, capacity utilization in November rose above 80 percent for the first time since August.  But is this sufficient to have caused jitters in the manic-depressive herd on Wall Street whose spirits rise and fall each day according to what that day’s news might faintly imply for monetary policy?

Get a grip, guys! Instead of worrying about how every mote of “good” economic news threatens to turn the Fed less stimulative, why not try to see the dark side of things. For instance, the scary stuff about capacity utilization could just as easily be seen as a ramping up of inventory by the likes of GM and Ford. If that’s the case, then both companies could be in bankruptcy within three years -- and wouldn’t that be a wake-up call for those stiffs at the Fed! Since the incoming chairman is already on his guard against deflation, a crisis in the auto sector could bring on – dare we say it? – sharply negative real rates.

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Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers’ initials will be used unless express written permission has been granted to the contrary. All Contents © 2005, Rick Ackerman. All Rights Reserved. www.rickackerman.com 

-- Posted Friday, 16 December 2005 | Digg This Article

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