Re-Inflating the Bubble; Inflationary Pressue Lifting Stocks

Success!  The Obama administration along with the Treasury Department and Federal Reserve Bank have successfully re-inflated prices.  However, to the downside many will feel the pain of higher prices.  Simply re-inflating the monetary base, effectively making everything cost more will not help those without a job.  In addition, those on goverment welfare will now demand they receive more in benefits due to the rise in cost of living.  One big issue, the government never addressed the issue at hand and continues to avoid it.  Natural business cycles occur as businesses boom, plateau, and some business die.  It is quite natural, but when the government steps in and artificially props up bad business you are simply throwing good resources after bad rather than productive resources.  Thereby, you are delaying the ability of capital to be put to effective use and kick start the economy once again.  Look for inflated prices to stay and move higher while the economy will effective stay STAGNANT.

Although we’ll be in a stagnant economy it does not mean we will not have opportunities to make money.  We’ll need to focus on the best in the best industries.  This is where we’ll find the excess capital flowing to.  Medicoracy will not be tolerated as consumers will have little excess capacity to spend and will only spend it where they feel they are getting the “BEST.”

I am certainly looking for inflated equity prices as capital will flow to assets that are seen as places to beat inflation.  Stocks and commodities are always seen as assets you need to own during inflationary periods.  Gold, silver, platinum, copper, agriculture, grains you name it for commodities it’ll be the place to be along with stocks.  Unfortunately, the downside will be those who are dependent on the government will be left behind and suffer the worse.  If you are on government support or know someone who relies on the government I’d suggest pushing them to be self-reliant because the US Government may not always be there.

Remember, always cut your losses short and your winners grow.

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