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Three Simple Charts the "Doom and Gloom" Crowd Should SeeBy
Wednesday, October 10, 2012
Ignore the fear. Our economy is grinding higher.
Over the last year, I've told you several times to ignore the "crisis and collapse" crowd.
You may be paralyzed by the negative stories that fill the news. The European debt crisis is escalating. China is slowing. And people are still worried about a U.S. recession. But if you're getting swept away by fear, you're missing out on the chance to make safe profits.
If you take the time to cut through the hype and look at the facts, you'll be able to take advantage of the opportunities that are out there... And you'll see the economic story in the U.S. is slowly getting better...
One indicator to watch is the average sales price of houses sold in the U.S.
During the housing bust in 2007, housing prices fell more than 20%. Earlier this year, housing prices had a small correction (falling close to recession prices), but they've steadily increased since.
Like my colleague Steve Sjuggerud, I've been telling my readers this is a great time to buy a new home, before prices start to rise higher. And this indicates housing inventories that have been stagnant for years are finally moving. People are buying homes and are able to afford higher prices, on average.
 The trend is even stronger when you look at retail sales. U.S. retail sales are strong and getting stronger. Except for the occasional dip here and there, this chart has been climbing steadily since early 2009.
The U.S. economy is growing. Things are OK.
 Importantly, while the economy is "grinding" higher, it hasn't gotten overheated...
The last chart I want to show you today is the Federal Reserve's "M1 money multiplier." The M1 is a global sign of money inflation. It measures the actual flow of money through the economy...
The M1 has been increasing slowly over the past two years... but it remains below "1.0." So inflation should not be a big worry anytime soon.
.png) All these charts confirm what I've been saying over the past year: The U.S. economy isn't falling off a cliff.
The U.S. economy is keeping up a slow, steady pace of growth. If things continue at this slow pace, we could enjoy a stable, "middle of the economic-cycle" recovery for years.
That's why I still encourage readers to hold on to blue-chip, dividend-paying businesses like Microsoft, McDonald's, and Wal-Mart. These provide safety, growth potential, and stable income. I'm also going against the crowd and recommending you hold on to municipal bonds. Like fears about the U.S. economy, worries about municipal bonds are overblown. These are still great income vehicles for retirees.
Sure... things may change. The government's bungling will likely cause problems down the road. But the bottom line for you as an investor or retiree is that we have little to worry about right now.
All you have to do is look at the facts to realize it.
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig
Further Reading:
Doc has shown readers several ways to protect themselves from the government's bungling... And they don't involve making any drastic changes to your lifestyle...
"Stick to fundamental ideas like asset allocation, position sizing, and stop losses... and sleep well at night," he says. Read more here: Ignore Government Meddling... and Keep Making Money in Stocks.
Market NotesTHE BIGGEST COMEBACK STORY OF THE YEAR One month ago, we challenged readers with a question… Is Greece better off today than it was four months ago?
We may have our answer... Yesterday, the Greek stock market challenged its high for the year.
The Athens General Share Index (ATG) is now 22% higher than where it started 2012. And it's up 73% since bottoming just four months ago.
The financial press might write headlines about a crushing debt load, 60% unemployment, and rioting in the streets. But when it comes to Greece, this chart might be the biggest story of the year...
– Jeff Clark
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