Investing Trends

In today's volatile and confusing stock markets everyone is searching for a guru who cognizes which manner the market is going and when. Ask any economic expert and he will have got an answer. Ask 2 economic experts and you will have got 2 answers. Ask 3 economic experts - advertisement infinitum.

At the Federal Soldier Modesty Board we have got Mr. Greenspan and all his economic expert Governors talking at each other about how to best micromanage the U.S. economy. Notice Iodine said talking at and not talking with. Each 1 of them believes he have the Holy Place Grail and cognizes exactly what to do. It have not occurred to any of them that doing nil might be the best for everyone.

On April 27 there was an of import economical statistic released. The Employment Cost Index addition was 1.4% which was more than than expected by the investing community. This was considered to be negative for the stock market because the Federal is considered to be "anti-prosperity". This number shows more than people are being paid more money. Mr. G. believes this is inflationary. It is a theory he have dreamed up. Going back in history there is no existent correlativity screening wage additions cause inflation. This is one of his ain pet theories.

When you see the fact that worker productiveness have got increased 4 modern times more than than wages have risen it intends more to the underside line net income of corporations. The logic here is very simple. The companies are making more than money even though they are paying higher wages and therefore make not have got to raise terms on their merchandise. Maybe this is too simple for an economist. If I could do up a really complex expression I might be able to get his attention. Probably not.

This is just one statistic and I cognize Mr. G. and his money marionettes look at 100s of statistics, but delight make not put rising prices on the justifiable wage additions of the workingman.

The alkali cause of rising prices is too much money chasing too few goods. Today we have got so much so much competition (goods) it is extremely hard for almost any company to raise prices. Since net income are increasing 4 modern times faster than wages most companies will shave net income before they raise terms to their consumers because they make not desire to lose their market share.

Large corps usually have got debt. In almost all cases this was money borrowed for works and equipment. When interest rates rise there is nowhere to offset this cost as there is with wage productivity. This is a cost that ultimately must be passed along. As long as the company have room at the underside line it can make so. Right now money is expensive, not tight. The Federal desires to slow the economic system and it can make it this manner because companies will cut back their borrowing for expansion. The economic system will slow, but if they maintain on doing it they halt everything and that agency recession. Their thought is backwards.

If you desire advice on the stock market make not inquire an economist.