MyWorld Trader BLOG

The calculation of inflation needs to be tweaked just a bit.  How can you take out food and energy in your computation of inflation.  I understand that the ups and downs of food and energy costs were not a fator in previous years.  Now a days though you have to consider the fact that energy cost have far outpaced wage increases.  This has burdened the nation with an unexpecting tax.  Further more it sets off an inflationary snowball.  Cost of transporting increases which causes prices to rise to make up for the increase.  Look at your electric bill or any bill that requires a utility company to drive.  They now have fuel surcharges which cost the consumer more.  What about the increase production of Ethanol?  That is plating a role in inflation also.  It causes all the grain prices to rise because farmers are more willing to plant corn instead of wheat and soybeans.  Now we have shortages in those grains which is leading to enormous increases in price for those commodities.  Inflation will always be around, I think it may be time to factor in these two elements into the inflation calculation instead of always taking them out.  The increases have been to great to think they don’t have any corelation to the rise in prices. 

Philosophy has changed.  It may be time to start accumulating on the dips.  FED has made a major cut, potential stimulus package and overall belief the worst may be out on the table.  I put caution in the notion that the worst is out.  The “credit crunch”  may still have some reverberations out there.  Credit card delinquecies may still be an issue considering bills are now arriving from holiday spending.  Stimulus checks probably won’t be in the mail until March.  So, we still have somewhat of a lag on the optimism presented by the market the last few days.  I still like CITI in the $23-$25 range, CSCO under $24 and INTC Under $19.  If you want to make a lot of money LTRX may present the opportunity for a trade over $1.  It is at .74 as of this writing.