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Showing posts from July, 2009

Are We All Socialists Now: Government Intervention and Stock Market Returns

As a recent Newsweek cover asked, "Are We All Socialists Now?" And if so, should U.S. equity investors be alarmed by the prospect of greater government intervention in the economy? Historical data looking at this very question may be surprising to you.

Click the link below to watch a short 6 minute video, which provides some objective comparisons of stock market returns from the more free-market system in the U.S. compared to the returns from more interventionist governments from around the world. The evidence suggests that government intervention is just one factor among many affecting stock returns, and that an above-average degree of intervention is not necessarily associated with below-average returns.

https://admin.acrobat.com/_a772887163/governmentinterventionandstockreturns/

To Your Prosperity ~ Kevin Kroskey

Last Week Was Not One To Miss

Last week the Dow rose 7.3% last week amid earnings reports from many companies, as reported in the Wall Street Journal (http://online.wsj.com/article/SB124782681174757379.html). For most companies, it's not like the reports were necessarily good. It was that the news was not as bad as expected. This rapid rise in the market occurred despite poor economic news, including rising unemployment now predicted to go north of 10%.

To many investors, this seems counter-intuitive: poor economic news and declining earnings reports compared to the same time last year yet the market goes up markedly. How come? It's quite simple actually. The market looks forward and reacts to new and unknowable information. So even though the news was bad, much of it was not as bad as expected. Thus the new information positively changed market expectations and prices adjusted upward.

Unless you can predict the future, as investors we must stay invested through good times and bad to ensure we experience the…

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