Stagflation Thoughts?

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Jan 13, 2007 6:10 pm

Many, but not every pundit, thinks 2007 will be another decent stock market. Bears still live the woods. Here is a quote from the WSJ today:

"So who are these lonely bears, and why are they bucking the consensus? We talked to a few of them about their views. In a nutshell, they see stagflation, or something much like it, on the horizon. Stagflation is a cocktail of inflation and economic stagnation, a perfect storm of nastiness that is poison to stock prices, as it was in the 1970s."

Jan 13, 2007 7:02 pm

Thank you Democrats.


Raise minimum wages, raise taxes, squeeze the small business owner out of business, increase subsidies for social welfare programs, put the brakes on the economy with punitive excise taxes.  Deja vu all over again.  I remember the 70's well.

Jan 13, 2007 8:24 pm

Yep, I'm thinking folks might be forgetting or never have known about that time. One bear thinks we might experience a 20-30% market correction, due to "stagflation". I don't know about that, but I do believe that a lot of folks don't know how good things have been, how good they are - so purely from a selfish point of view, it makes sense to a least intellectually review the concept of "stagflation".


I guess we'll see what the Democrats do this time, and also the mood/demographics/economic educational level of our citizens.


Does here anyone worry about inflation right now? Personally, I believe this is the next big thing - an inevitable result of good times and rising expectations, technology for that matter. 25% of the Christmas dollar went to big screens, something like that. American consumer: "if it exists, I gotta and get ta have it". Maybe, though, folks will stay home watching those big screens and burn less oil. We'll see. I think we, as advisors, have got to push the asset allocation a little, though, based on our understanding of the economic cycle.

Jan 13, 2007 9:09 pm
babbling looney:

Thank you Democrats.


Raise minimum wages, raise taxes, squeeze the small business owner
out of business, increase subsidies for social welfare programs, put
the brakes on the economy with punitive excise taxes.  Deja vu all
over again.  I remember the 70's well.





I remember the 1930's well. 1932, that was great year to be starting out in the stock market.