We think the new stimulation package will accomplish much more

Yesterday the market passed a test and the rally was challenged but survived again. We were concerned we could get a premature sell signal.

Unfortunately the media continues with negativity. As we pointed out, statistics lie when they are misused and today the media is continuing to misuse it. For instance they expect the job losses in December will bring the total in 2008 up to 2.6 million jobs lost for American workers. Then they lie and say that is the same as in 1946 when WWII ended and production of military weapons ceased. Again they are lying because they do not say that we had less than half the work force in 1946. They could just as easily say we now have ten times the unemployment that France has today discounting the fact France has far fewer workers who work 15% fewer hours a week and start work with five times the average American worker’s vacation time. France in truth has more than twice the unemployment problem that America has at this time when we correctly base the statistics on per capita employees and hours worked per year.

President elect Obama seems to like the exaggeration of bad news too. That is a very dangerous situation unless the negativity stops in 12 days when Obama takes office. Fear mongering could end the American economic recovery and cut the stock market rally short. Americans do not like to have their intelligence insulted and if fear mongering continues Obama’s administration’s popularity will fall faster than Bush’s did and Obama could become as unpopular as the last Congress.

Asia was down fractionally last night.
Europe and American stock market futures are down ever so slightly now.

Today we are at a psychological pivot point. Could it be that the fear mongering was only done to lower expectations for today so that the media could tell the truth after the announcement and say we are much better off than in 1946 when we had widespread unemployment and all the troops came home looking for jobs?

Could it be that fear mongering will end completely in 12 days so that the world economies will recover as expected this year?

Or will fear mongering continue to be used as an excuse to turn our economy into a socialist system where people pretend to work, the government pretends to pay them, and everyone pretends they are better off as in Zimbabwe where inflation is out of control?

We believe fear mongering will end in 12 days and unlike last November’s Election Day when the stock market plummeted, we believe the markets will renew and strengthen the current rally. We are counting on the new President Obama to have one of the best and most hope filled inauguration speeches ever delivered. We expect to see the nasty bickering in government to end, and for the new American Congress to start doing meaningful work, and for the new Majority Whip in the House (John B. Larson, CT) to create a whole new positive atmosphere.

We think the new stimulation package will accomplish much more than the $700 billion President Bush sent down the Wall Street financial rat hole because it will actually put real cash in circulation and fix our infrastructure as we have done often in the past and as China is doing today. Recessions are an opportunity for nations to work on infrastructure. President Eisenhower did it after WWII by rebuilding bridges and national highways. The new administration promises to rebuild mass transit, expand alternative cleaner energy sources, and expand communication infrastructure to improve American productivity and reduce waste.

That is why we maintain that the market has already bottomed and anticipates the economy will begin to recover this year. That is why we believe that the world markets will at some point this year be 35% to 50% higher than their November 2008 lows (some are already up about 20%). That should recover about half the losses many investors experienced I 2008 and the velocity of money should return to normal ending the credit crunch.

Good luck with your investment journey.