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Why You Must Immediately Bet on InflationBy
Wednesday, December 10, 2008
Last week, the Fed took its first step in a new, more desperate tactic to fix the financial system... Second, there's no political resistance to inflation. The dollar is in its strongest uptrend this decade, and Treasury rates are at all-time lows. There's no reason for the government not to inflate. There's no economic penalty for running an inflationary policy. Plus, the public is demanding stimulus and bailouts right now. They're giving politicians the green light to create money.
Further Reading:
If You Want Cheap Gold Coins, Canada Has Them Market NotesTHIS "OBVIOUS" TRADE IS A BIG WINNER SO FAR
The infrastructure trade we discussed last week is fast out of the gate...
It's hard to find a group of stocks that has suffered more this year than the companies that design and build roads, bridges, refineries, power plants, and pipelines. Recession fears sent these stocks down more than 75% from their summer highs. But these beaten-down builders have the government on their side. And they have huge potential to climb higher if the market enters "rally mode." News of Obama's big spending plans sent our featured stock, Shaw Group (SGR), up 21% in a week. But there's a problem with this trade... It seems too obvious. If you explained it to your average Christmas party guest, he'd nod his head in agreement. The best trades are usually the ones that make the average party guest recoil in disgust. Then again, sometimes the government throws so much money at an asset class that "obvious" trades are big winners. Shaw Group is rallying... other major infrastructure builders like Fluor (FLR), Chicago Bridge (CBI), URS Corp (URS), and Jacobs Engineering (JEC) are doing the same. We'll keep an eye on this "obvious" trade. Right now, it's a winner. |
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