Over the past two months, the Wall Street cheerleaders have repeatedly told investors that the U.S. economy is in good shape, there's no inflation, and that stocks are "cheap."
The facts, however, paint a different picture. As you can see in the charts below, economic growth (represented by the year-over-year change in real GDP) has slowed considerably over the past two years, while the costs of industrial commodities and raw food products (corn, soybeans, wheat, and cattle) have risen dramatically.
Meanwhile, supposedly "cheap" stocks have gotten a lot cheaper. The Dow Jones Industrial Average has fallen more than 1,000 points (7.9 percent) and the S&P 500 has declined 7.1 percent since reaching all-time highs on Oct. 9.
Personally, I've never considered anything that was likely to continue to decline in value to be "cheap." And my investment models indicate that stock prices in general will continue to trend lower over the next six months.
Although the economy improved somewhat during the third quarter of this year, even Federal Reserve Chairman Ben Bernanke said in a speech to the U.S. Congress last week that a host of economic problems will cause business growth to slow noticeably in coming months.
Bernanke also acknowledged what I've been telling our readers over the past couple of months — that inflationary pressures are continuing to mount. To be more specific, Bernanke said, "further sharp increases in crude oil prices have put renewed upward pressure on inflation and may impose further restraint on economic activity."
Bernanke went on to say, "These factors were likely to increase overall inflation."
While the Fed claims that "core" consumer price have risen only 10 percent over the past five years, try telling that to anyone who pays for medical care, heats their home, uses gasoline to run their automobile, and buys food at their local grocery store.
But, the choice is yours! You can keep listening to the self-serving Wall Street demagogues who try to convince investors that stocks are always a bargain — even when a preponderance of evidence suggests stocks are headed lower — or you can start making money, whether stock prices are going up, down, or sideways.
Over the past month, the S&P 500 has fallen 7.1 percent. Yet, both of our model portfolios have generated positive returns. Our conservative portfolio returned 4.0 percent since the week ended Oct. 9, while our aggressive portfolio returned 9.9 percent.
Meanwhile, our top-performing ETF recommendations rose 21 percent, 19 percent, and 8 percent, respectively during this same period, while not one of our recommended ETFs declined during the period from Oct. 9 to Nov. 9. Click here for information on these funds and how to profit during both bull and bear markets.
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