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What's Holding the Economy Back?

Chris Lahiji
Chris Lahiji
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Let me put everything that you've heard about the economy in perspective. The markets accelerated their decent with a bunch of back-breaking news that is slowly starting to make the Bush Administration blush.

HERE IS WHY THE DOW, NASDAQ, and S&P have pretty much "corrected" in the past few months.


5. War in Iraq: Face it, wars are expensive to fight. The United States has already spent over $100 billion fighting Sadaam's regime and "terror," but all that money isn't really helping fuel "organic" economic growth. In essence, the low income and middle class households don't have many catalysts to keep spending, and that scares investors, because they do the most spending!

4. The Fed: Interest rates are only going to be rising. That scares the living hell out of me, given the fact that this country isn't moving in the right direction fast enough. If prices go higher from here, and wages stay the same, then let God be by my side.

3. The Election: Oh man! Talk about a close race. In my opinion, the country has not had this much polarity since Vietnam. It is going to be a VERY close race, and no one knows who the winner is going to be. Many fund managers and investors alike believe that if Kerry wins, he will be more stringent on tax laws, which will come to hurt investors in the stock market. Whenever Kerry moves up in the polls, expect the market to take the opposite affect.

2. Terrorists: One bomb goes off on American soil (Heaven forbid), and everyone starts panicking, stops spending, and becomes more tenuous about the future. This is horrendous for the corporations or sentiment to say the least. The uncertainty alone refrains buying.

1. PRICE OF CRUDE: Now don't you wish that they would have spent more time developing alternative energy! It just shows you how dependent the US consumer is on gasoline. When you have 80% of the country living on fixed income and with burgeoning monthly bills, it's really hard to be an avid consumer spending freely. With $50 dollars approaching, maybe people will go back to the good old days of carpooling.

All five of these factors have caused the markets to test new lows for 2004. I'm confident that the price of crude will not go much higher because of Bush's allies in the Middle East realizing that he is getting close to Election Day. The war in Iraq and the fear of terrorist activity unfortunately are variables that no one really has much control over, and will have to be factored in moving forward.

In short, nothing in the past couple of months has helped investor confidence. Some of our companies have reported tremendous news, but buyers are rare.

I'm still bullish, because as long as the population keeps growing, companies need to manufacturer goods and provide services for them.

Right now, there are a lot of attractive plays. Even though "blood" has been spilled on the streets and everyone is shying away, now is when the great investors buy.

Our day trading picks have been on fire, recording another 10% of gains in the month of August. Regardless of the situation, we do our best to make money for our members.

Warm Regards,
Chris Lahiji

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