I will be honest, I have not stayed out of the market and in fact have traded stocks at a pace about double what I have done in the previous 4 or 5 years.  But I have done so with less money and with substantially shorter-term  trades.  That is what caution and the high volatility of the past two years have dictated (at least from my view).

But hold on here, folks!  The wait for smoke to start pouring out of American factories is about to end.  (please take this metaphorically because lots of growth will come from small business and service industries)

Anywho, starting a few weeks ago I began to take a different tack as the view from the bottom had changed.  I have been looking for investments and not trades.  That means that long-term buys appeal more than short term trading.  I did so very cautiously and with a bit of trepidation. A lot of worry still wracked my fragile mind.

Then as the news piled up last week (I will give you the headlines soon) I realized that key economic indicators were finally confirming my earlier impression.  Now I am looking at investments to hold on to for at least six months and perhaps even a year or more.  Things that have real growth potential in an expanding economy, things that provide a steady income stream via historically high dividends that can only grow if the corner has  really been turned.

Why am I telling you this.

Its simple.

For the first time I don’t believe we will have a “W” recession — the kind where another big downturn would be imminent any day.  For the first time I really believe that a “V” recession is what we have just gone through and that the right-hand side of that “V” is going to be steep and long.

That means companies will start growing, earnings will increase (a lot really since most companies are ‘lean and mean’ right now), tax revenues will begin to increase (so the government can start paying off our incredibly high national debt), and unemployment will start to shrink (not as fast unless Obama really takes action as promised recently).  More importantly, because the FED is keeping interest rates low (no quick end to that policy) and hundreds of billions of Obama’s stimulus plan will start to hit main street this year, growth could be pretty phenomenal.

Now, let me give you a few of the headlines from last week as promised:

“Exports up for 6th straight month, boost recovery” — a weak dollar has helped here

“American’s net worth up for 2nd straight quarter” — think both home values and investment portfolios

“Leading indicators rise for the 8th straight month” — money supply, stock prices, building permits, improving labor markets all helped here

“Americans most pessimistic they’ve been since January”  — this is a contra indicator (from CNBC) and and is mostly reflective of political issues rather than raw economic ones

The bottom line is that I have changed my view on the current recession.

It’s over folks!!

And it is not coming back anytime soon.  It was painful, yes, but the gain from the pain is just ahead.

The next year or so of economic and investment  (primarily stocks) growth is going to be really good — probably at least 3% GDP growth in 2010 and the stock markers should be up steeply as well (but not straight up)  I wouldn’t be surprised with the  Dow at 13-14,000 by next year end.

I’m feeling real good about the near term future ( I always feel good about the long-term future) and I think you should too.

The old caveat on unemployment is always out there but it is a 6-12 month lagging indicator and yet I expect it will begin to improve almost from the first months of 2010. So I’m not going to beat that dead horse anymore (unless Obama and the dems fail to stimulate here as they have recently promised — and I will be watching President Obama).

Whew!  Thanks heaven (and I really mean that).

The recession is over.

Good times are just ahead.

I’m counting on it!

Thanks for the photo from flickr to ahbijeet.rane

This is to be expected I suppose with the continuing weakness of the Dollar.  You sell the same, or perhaps a few more, number of products overseas at the same price in local currencies and you are going to get more $$ in return.  This is particularly true of the companies mentioned above because they have a big presence in countries like China, India and Brazil where last quarter’s (or 2009) GDP estimates are MUCH greater than those in the U.S.  For example, China’s economy is expected to grow at a rate of over 8% in 2009 (negative 2.4% for the U.S.) and Brazil’s GDP grew nearly 8% in the third quarter, or more than twice the GDP growth rate for the same period in the U.S.

Governments and people alike are spending in these countries.  And they are buying great consumer products made by American companies such as those I mention above.  Cause for joy?

Tack on to this a DOW that is well above 10,000 (even with a 100+ point loss in the last two days of last week).

Sounds pretty good doesn’t it?

Maybe so, but I am concerned about a few things . . . like Obama’s public satisfaction ratings dropping below the 50% level in two major polls this week.  I think that these polls are forward looking (6-12 months) just as much as the markets normally are (and here I feel I must remind you that they are still WAY below levels from two years ago).  Hold on here buckaroo!

Tack on to that a few other parcels of data such as the unemployment rate at post-depression highs, the real unemployment rate about 17.5% (adding in those job-hunters who have just quit looking or have taken part-time/underpaying jobs), almost ONE IN FIVE AMERICANS un- or under-employed, more than 120 banks have failed this year, lenders are being more restrictive, consumer confidence is low, and credit card companies are raising rates (in the face of record low rates from the FED) and they are adding all kinds of crazy fees for dumb little things (you know what I mean if you have read a CC statement lately).

This has been a good year as far as market equities go (since March 9’s low anyway) but after any kind of Santa Claus rally there is bound to be  a big dose of concern and dubiosity.

Ah huh, times are great for employers (who are still in business)  . . . they can hire the best talent out there on the cheap, and they are cutting costs in other ways too.

However, you and I know that this is not a great time for consumers or workers and it sure as heck isn’t a good time for government (spending our tax dollars for the next five years this year).

Truly, this is all a tough read economically right now.

If you read or hear about highly positive thoughts from economists in the next couple of weeks you had better check who they are working for (banks, lenders, GM, or others with TARP $$).

If you hear or read about highly positive vibes coming from any politician in the next couple of months you had better check who they are working for (and it ain’t you my friend!).

Two problems reign supreme  now: unemployment and public (the government’s) debt.

If President Obama and Congress don’t get a handle on BOTH of these pretty quick then you had better lock the barn doors and hide the chickens.

This isn’t a gloomy forecast . . . it is more of a warning of what could be ahead IF . . . . . .

And, IF you want change you had better be calling and writing your elected leaders to get to work on the two problems noted above.

It doesn’t take a genius to recognize this (I am sure you do) but our elected leaders are rarely genuises (as history has amply proven).

That means you know what to do even if they don’t!!

thanks to flickr’s danoxster for the photo