The next time you’re tempted to watch TV news, ask yourself “will any of this matter in 12 months?”
Answer “not likely”. On that topic, last week David Goldman was as provocative as we expect:
(…) Remember: most of what people tell you is important, isn’t. Most of what the commentators learned in college from Keynesian professors is wrong. Most of what Fed Chairman Bernanke thinks he’s doing, he isn’t. Look at the elephant in the living room: until 2008 America had a $600 billion capital inflow each year. Now it doesn’t. Land, labor and capital sold at a premium while the rest of the world was buying. Now it’s not. Americans with mediocre skills are not going to earn top dollar. Many of them won’t earn anything at all.
The world, meanwhile, has changed around you. The fastest wave of industrialization in history continues apace. People who grew up with dirt floors and outdoor plumbing and bicycles now live in modern apartments and drive cars. And lots of things only Americans could a generation ago, everyone can do. This is very, very good for companies who can ride the wave, and very, very bad for those who can’t. You want to be a chemical engineer at DuPont–the world needs more fertilizer–but you don’t want to be a construction worker in Las Vegas.
There are plenty of companies with stable and growing profits. Bonds stink by comparison, especially Treasury bonds. Utilities will underperform as term yields rise.
And guess what: financials are worth buying, as an option on growth. See http://www.macrostrategy.com