Scott Brown is In the US Senate and I am in the US Economy

I've been very pessimistic on the US economy for most of the last 9 months, but Scott Brown's victory leads me to believe that we entering a new period of growth and stability.

Last March when the S&P 500 fell below 700, it seemed poised to fall much further.  As it came storming back, I was very skeptical and kept expecting a retest of the lows.  I now recognize that, like many, I missed an extraordinary chance to recover all of my losses of the previous 18 months and then some.  

There are points in life when you can no longer deny what is going on around you.  It often requires a watershed moment.  Scott Brown's election is such a moment.

We have now set up our government for a potentially extraordinary period of political balance (or gridlock) where a Democratic President and a Republican legislature enables companies to engage in long term growth planning on the basic of highly foreseeable federal government policies.  Moreover, special interests will be contained by this balance and economic responsibility (i.e., a balanced budget) will be restored.  During the last period where we had this same political balance - from 1992 to 1998 - the US experienced extraordinary real growth based on innovation, creativity and real output.

The ridiculous period during which our government directed government monies into the hands of very few who created economic chaos to the detriment of many is about to end.  While much of the government's spending and incentive programs are well overdue (we have needed for years to invest in energy alternatives and efficiency), the Pelosi - Obama strategy of printing money to solve every problem is now contained.

I no longer believe that we are going to see any sort of massive correction in the US stock market.  Instead, my prediction is now for a move in the S&P to 1300 this year and to its 2007 levels by the middle of next year.   I also believe that we will experience a very strong US dollar and a precipitous fall in gold.  I also believe that investors will experience much better returns in the US than virtually any other market in the world.

Jason Rodgers
Jason Rodgers: Jason Rodgers was an experienced research analyst for a major bank prior to retiring to run his own investment consultancy in beautiful Lihue, Hawaii. Jason contributed articles to BestCashCow from 2008 to 2014.

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Comments

  • Sam Cass

    January 20, 2010

    If you say buy then it is time to sell.

  • JRodgers

    January 20, 2010

    You're right. If past performance is any indicator of future results, the market is really going to hit hard here.

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