Monday, October 12, 2009


Many people have been wondering how the US stock markets can still be (in general) improving when so many things about the economy are clearly disastrous. Well, it's true that unemployment and underemployment would seem to point to lower stock prices. It's true that a tripling of the federal budget deficit to levels beyond nightmarish since inauguration day would seem to equal lower stock prices. And it would seem that the overhanging threat of dramatically higher taxes on the horizon would predict lower stock prices.

All of that is true. But consider that over the past two quarters the US dollar has been hammered down harder than at any time in a couple decades. So, the dollar in your pocket today buys far fewer yen, euros, pounds, Canadian dollars and so forth than it did nine months ago.
How does that help US stocks? It just sounds like more bad news. Well, it makes US manufactured goods cheaper to purchase for people in countries whose currencies are stronger than ours. That's part of it. But the bigger part is that money all around the world looks at the US stock market as the bargain bin. Our stocks are priced in dollars and dollars are rock bottom cheap.
So, the NYSE and NASDAQ aren't Tiffany and Nordstrom priced.
Heck, they aren't Target or Walmart priced.
They are DOLLAR TREE priced.
You are living in the world's bargain basement for stocks. So, "Welcome to THE TREE, baby!"
But, be careful. If steps are ever taken to strengthen the dollar, the US stock markets will fall. And when they do most of us will blame it on all of those horrible things back in the first paragraph.