I have to get ready for Uncle Ben's report, which will occur shortly, but I want to go over some important ideas first.
As the stock market has risen significantly since the beginning of the year, and has quickly added value to many sectors of the economy as reflected in stocks, there are those that have lagged. Specifically, industrial as well as retail companies have beaten the socks off many of the commodity types.
The reason might be that the materials we use in making things have not been demanded as much as the finished goods. That is, the merchants are selling product but the providers have to gather the raw materials with which to make the product. As that part of the stream starts up, we will see greater demand in materials such as cotton, lumber, cement, copper, iron, many items whose base commodity is oil and many other commodities. Don't be afraid to hold them. And if you don't have them, look into getting some.
The housing market, while not red hot, is really moving. Witness the number of new homes for sale in the recent parade of homes in the vicinity. I was pleasantly surprised at the number of new homes scattered throughout the area, and at the beauty and quality. Getting new homes means someone is either selling locally or moving into the metropolitan area. That's not all bad!
Our area wasn't as affected as many other areas in the country. We had not overbuilt such as the likes of Phoenix. I saw thousands of unsold homes in the surrounding areas, too many to count. I have heard that many were demolished just to clear the range of unsightly, unhealthy spec homes. I guess they will have to start over from scratch.
A sector you might want to look at for investment is the financials. Banks that is. Surely and slowly we are lifting out of the dung. One group that led the horde into the abyss was the banks. Now, with the courtesy of the Federal Reserve (which, by the way, is not a federal institution, but a federation of very large banks approved by We The People to manage interest rates, among other things) the banks as a group (using ETFs) can be a handy way of investing in their return to glory. They typically lead the way back to prosperity. After all, wasn't it Willie Sutton who said, "cause that's where all the money is."
They have a lot of money to lend, which they get as low as a quarter of a percent, and loan out with at least a 2 or 3 percent spread, and can hold it for a long time. As long as they're making money, they're happy. Looks very good for those who wish to invest in housing directly or indirectly by owning the builders, or the providers of the materials with which we build homes! Looks good.
The Motley Fool, a well-known and well-read advisory group, recently interviewed 10 CEOs of major domestic companies and all of them are in agreement that the best outlook for the economy (think stock market) is upward for several years to come. Not the time to get out, perhaps reshuffle, but get into the markets if you are not. The worst place to be is out of the market when it has every reason to advance. Or at least the best chance in a long time.
I have to say that the past 12 years have been dour to say the least. Take your time, but make up your mind to participate. Many ways to do it, but do it.
This just in: Uncle Ben is continuing shelling out cash to the banks, hoping they will get off their "you know whats" and get folks the money they need to build, rebuild, make something happen. He talked for a long time, and most of it was positive, but slightly cautious as one might expect. He would not want a rampage!
A column in Sunday's Press-Gazette incorrectly attributed a famous quote to John Dillinger. It was Willie Sutton who reportedly said he robbed banks because "that's where all the money is."