Dow 10,000 Before Year End!
The Dynamic Wealth Report
August 12, 2009
Why You'll See Dow 10,000 Before Year End
by Brian T Mikes, Editor
Lately I’ve been really positive about the markets. But a few nights ago,
all of my thinking was thrown for a loop.
I had dinner with my friend, Jay. We sat on his back porch eating grilled
chicken and Caesar salad. The scotch flowed freely. After a couple of
drinks, our discussion took an interesting turn.
Jay’s business is struggling.
A few years back, he could count on earning more than $100,000 a year. Now he’s struggling to make half that. With crushing mortgage payments,
putting kids through college, and the constant pressure to save for
retirement… he is exhausted.
And Jay’s not alone.
Millions of people are out of work. One business manager I know has a
telling story. Every day for the past three months, people have been
walking in off the street looking for work. It’s getting so bad, he’s
considering putting up a sign – “No Jobs Here”.
Those lucky enough to have a job are finding their work hours cut.
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It’s impossible to gather accurate figures, but some estimate millions
of workers are working fewer hours. Just look at the auto industry. Mandatory plant closings… reduced work days… lower pay… reduced
benefits.
It all adds up.
I had to ask myself again… Am I too positive on the markets?
Then I cracked open my issue of CFO magazine. Don’t laugh. You know I
read some really strange stuff. You never know where a great idea or an
interesting data point might come from. What I found in my magazine was
surprising…
They were looking at data from surveys of CFOs around the world. Who
better to talk to than the guys holding the company checkbook?
Two things jumped out at me.
The first was a question regarding their outlook. Simply, were they more
or less optimistic about the company’s financial performance? An
amazing
40% of CFOs in the United States said they were more optimistic.
But that’s nothing when you look at the responses out of Asia.
Asian CFOs are apparently an optimistic bunch. Greater than half said
they were more optimistic about their company’s financial performance. (Maybe we should spend more time looking to the Asian emerging markets
for investment ideas… but that’s another article.)
It was the second item that really grabbed me.
Nearly 3 out of 4 CFOs are expecting the economy to recover in the next
12 months. And, a shocking 53% of those believe the recovery will begin
before the end of 2009. Isn’t that astounding? A huge number of CFOs see
the US exiting the recession in just a few months!
I don’t mean to bore you with all these facts and figures.
What I want to point out is simply this… CFOs are normally a pessimistic
bunch. And as a group, they’re seeing not only their own businesses
recover, but the economy improving as well.
Take it as a warning. Individual stories of struggle and misery are sad. But don’t rely on them as an indicator for the whole economy. If we see
a recovery half as good as what these CFOs expect… I don’t think Dow
10,000 can be too far behind.
• Sugar (Over $0.22 per pound)
Sugar’s been rallying over the last few weeks. Monsoon rains didn’t show
up in India. That’s bad news for one of the world’s largest producing
nations. On the other side of the world, too much rain in Brazil is
hurting production as well. Heavy rains are interfering with the
harvest. All signs point to higher prices ahead.
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