The Road to Zimbabwe

By Terry Coxon, Editor, The Casey Report

Sprinkled among all the official talk about efforts to end the current recession, you’ll hear assurances, notably from Federal Reserve Chairman Ben Bernanke, that when the economy does revive, it won’t be allowed to blast off into runaway inflation. The Fed, we’re being promised, will prevent such a launch by reabsorbing the hundreds of billions of dollars of excess liquidity it recently created to halt the credit crisis.

It’s been virtually impossible for stocks to put two consecutive up days together. It hasn’t happened since October 30-31. And the one thing about support levels - the more they’re tested, the weaker they become. It’s much more of a traders market right now. No one is comfortable holding new positions for long. When short-term profits are available, they’re being taken.

 

In case anyone is curious, the inflation rate for July of 1981 was 10.76%. A year later, Paul Volcker’s rate hikes had slashed inflation to 6.44%. Speaking of Volcker, his name is certainly being tossed around a lot lately. And not just for his endorsement of Presidential candidate Barrack Obama.

You want to know what you’re getting in a stock, so you need to look "under its hood." That’s why I insist on checking a company’s fundamentals. Things such as sales growth--are they selling their product at a good clip and increasing sales? Or earnings growth--is the company making money and increasing its profits quarter to quarter?