I've endeavored over the last several years to get people to invest in great American companies, even in the face of policies that have resulted in the worst post-recession recovery ever.
My rationale for this hasn't changed, in fact it's even stronger - there is a lot of prosperity in the world that's creating opportunities that American companies with their unique skills and great workforce are benefiting from. We are so myopically focused on a limited vision of the world.
The Message of the Market
There is a disconnect between the stock market and several popular notions.
The Dow Jones Industrial Average doesn't reflect or add credence to White House economic policies.
The Dow Jones Industrial Average isn't the best barometer of America's economy.
The market isn't frothy, it's not the talk around water coolers and nobody thinks they can stop working tomorrow to day-trade themselves into ownership of their own personal island in the Caribbean. It's not the talk of Main Street and the new all-time high on the Dow didn't even make it on the cover of two New York daily newspapers - the Post and Daily News.
In fact, the cover of the Post felt the story of UV rays from certain nail polish and sealing techniques was more important and the paper couldn't resist a good pun on Hugo Chavez who passed away this week.
The NY Daily News had a leggy Martha Stewart on their cover and a story of "years of lurid team hazing at elite city HS." There was a big ad at the bottom of the front page touting the Power Ball jackpot now $123.0 million urging readers to "play now."
Impact of Global Economy on US Profits
The Dow and many companies not in the Dow are benefiting from the global economy with growth coming from places like Luanda, Baku, and Shenzhen. Take a look at the four most influential components of the Dow and where the growth and money came from in the fourth quarter of last year.
International Business Machines - IBM
Caterpillar - CAT
3M - MMM
Chevron - CVX
Random Talk with Fortune 500 CEO
A couple of months ago, I had the privilege of watching the LA Clippers extend their amazing winning streak on their home court in Los Angeles. I watched the game from the suite owned by Avery Dennison (AVY) and spent a long time chatting with the company's CEO. It was a great discussion with someone that runs a global company in a very competitive and demanding environment. I couldn't believe his enthusiasm about his business even as he fretted about the US economy.
The company's business segments include pressure sensitive material used for branding, barcodes, and product identification among other things; and retail items used for pricing and identification and office products. I doubt anyone goes a day without running into the company's work-it would seem the perfect proxy for the economy and it is-the global economy. I was told 70% of the company's business comes from outside the United States. I had no idea there was a time market-watchers used news from Avery to determine if the time was right to buy stocks.
That's still the case as the shares are cheap by all the traditional valuation metrics but it's not a measure of the US economy anymore.
Conclusion
I feel so awful for people that sold into the lows of 2009 and never came back to the market. They held out of the market in part because they were burned but also because of all the doom and gloom. Yes, I write daily about the dangers of socialism and the wonders of capitalism. I write each day of the War on Success and President Obama's desire to reinvent America in the image of a European welfare nation, where wealth is shared and dreams are limited. Yet, I've said over and over you must seek to become an owner.
You should own a house, land, gold, silver, Patak Philippe watches, and shares in great American companies.
I think the Fed should stop printing and taxes should be lower and corporations should be allowed to repatriate money from overseas profits without onerous penalty. The next four years are going to be difficult but not impossible as long as concerned citizens fight back. In the meantime, things have changed and not overnight, as trends at Avery Dennison demonstrate, the rest of the world has been bitten with the bug of true independence that only comes with capitalism, rule of law and energized citizens.
There are always bubbles out there but it's not the stock market right now. I think there is a "Woe is me Bubble" and I'm going to debate Dr. Keith Ablow about it this morning on Varney & Co on Fox Business 10AM- Please tune in.
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