Thursday, January 21, 2010
Stock market skids lower, as predicted by this blog
Readers of this blog should not be surprised at the stock market's recent about face. I have been saying for weeks now that a renewed focus on deficit reduction by Obama will not only abort the rally and economic recovery, but send the market sharply lower--perhaps even to the March '09 lows--depending on how serious and austere the deficit reduction measures are.
I have been staunchly bullish over the past year and rode this rally up despite widespread cries of gloom and doom. Now I am bearish.
I did what I did and do what I do because I understand that the most important driver of the economy are the fiscal policies of the central government.
When you know that, that's pretty much all you need to know.
Government spending adds to GDP and the net worth (wealth) of the private sector. When the cental gov't runs deficits the private sector runs surpluses and when the central gov't reduces deficits or runs surpluses, the private sector's surpluses diminish or turn to deficits. That's the way it works. It's that simple.
It's not my fault that nearly everything you hear about economics is wrong. I've been doing what I can to try to educate and inform.
For more on my outlook and what 2010 has in store and how you can make money on the policies and trends that are shaping up, please purchase my Outlook 2010 report. It's only $39.95.
Go here to buy it.