Tags: forbes | stock | recovery

Forbes: Stocks Will Soar by Year-End

By    |   Tuesday, 20 Jan 2009 05:22 PM

Business publisher Steve Forbes says that stocks will be soaring by the end of 2009, despite the current mood of malaise in the U.S. and global equities markets.

"Amazingly, equities will end the year up. Most shareholders will experience something they've forgotten existed: capital gains. True, the economy is now in a bad slump, and the Obama initiatives will do little, if any, long-term good," writes Forbes in his bi-weekly column in Forbes magazine.

“But the forces of recovery will break through. As they always do, stocks will rise before the economy does. There will be volatility aplenty, but imperturbable bulls will be smiling a year from now."

Forbes said the planned stimulus package proposed by President Obama, is mostly a wasted effort, as are spending plans being mulled in Europe, China, and Japan.

"Governments are indeed critical to economic growth — but not in the manner we see unfolding here. While times and circumstances change, principles of economic growth do not. The basic ones have stood the test of time."

Forbes said that keeping the U.S. dollar stable in value — which has "manifestly not been done" — is more vital than a deficit-spending plan. So is keeping tax rates on income and investments low, making it easy to start a new business, and removing barriers for businesses, like tariffs.

"Despite its sheer size, the impact of the new President's fiscal program, after the initial euphoria, will be painfully limited. Instead of a jolt like from downing a six-pack of Red Bull, we'll get the economic equivalent of a tepid cup of decaffeinated tea," Forbes says.

The economy will start to grow again in a few months on extra liquidity now being pumped in by the Fed, lower energy costs and very low inventory levels. Yet the Obama programs could well impede or retard the pace of this nascent expansion.

“It could be a minor version of the way FDR's incessant experiments in the 1930s — price and wage controls, massive regulation, huge tax increases, forced unionization — severely damaged the U.S.'s climb out of the Great Depression."

Economist Irwin M. Stelzer, writing in The Weekly Standard, indicates that business conditions continued to weaken across the country.

"Retail sales were generally weak as was the labor market, and manufacturing activity continued to fall," Stelzer said.

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Business publisher Steve Forbes says that stocks will be soaring by the end of 2009, despite the current mood of malaise in the U.S. and global equities markets. "Amazingly, equities will end the year up. Most shareholders will experience something they've forgotten...
forbes,stock,recovery
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2009-22-20
Tuesday, 20 Jan 2009 05:22 PM
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