This is an excerpt from a report I’m sending out to my clients. For a full copy of the report, feel free to email me at bill@bullingtoncapital.com and I’ll send you a PDF copy.

The Balance Of Worldwide Economic Power Is Changing

There is a shift in the worldwide balance of power and the new industrial revolution is not limited to one or two major industries, or even one or two countries for that matter. New technologies have uncovered vast deposits of natural gas around the world, particularly in the U.S. The worldwide demand for energy is constantly growing and in many cases exceeding the population growth in many countries.

So how does that affect you? The answer is not short, or simple, so instead of boring you to death with mountains of data, I’ll summarize the results.

First and foremost it means jobs, and lots of them. It means higher profit margins for many companies, which tend to lead to higher stock prices over time, and that time is getting closer.

Higher employment, higher profits, higher stocks prices, sounds pretty good so far, right? So what’s going to go lower?

Two things come to mind immediately. Our deficits (rising revenues bring in higher taxes) and a reduction in the negative balance of trade. Both of these developments will have an impacts beyond the scope of this article, however, they are both very positive for the economy.

The proof of these developments occurring can be found, at least in small part, in the clippings I’ve included in this report.

These articles are a small example of the hundreds of billions of dollars being invested by corporations of all sizes in the discovery, production, distribution and consumption of energy.

Here are the major benefactors as I see them. Electricity generators, electricity transmitters, natural gas developers, natural gas providers, providers making the consumption of electricity more efficient, auto manufacturers, and steel manufacturers are currently benefitting most. The fact that so much spending is occurring in these areas has already begun to show up in retail sales, the employment rate, disposable income and savings rates.

As a result of all of economic activity occurring in the energy complex you’ll see increases in housing, financials, consumer staples, automotive, and shipping. In fact, just about every major industry group will benefit.

You know why I’m so sure about this? Because the people working for these companies need to eat. They also need a place to live, will probably want to wear clothing and will most likely have use for a car, particularly in America.

Since the U.S. is still the largest economy in the world, as economic activity picks up here, it will pick up overseas. In short, over the next few years we could be looking at a time period very similar to the 1980’s.

I see, hear, and read, all of the negative press that would lead you to believe the world is coming to an end and I’m not going to address it here. I’m only going to suggest that you get on your computer and Google the phrase “Business Week Magazine, The death of equities 1979”. You will see some amazing similarities between what was happening in the late 1970’s and our current situation.

Incidentally, the 1980’s went on to see an array of economic and technological advances that led to one of the biggest bull markets in our country’s history.

As I mentioned a little earlier, I have included a few clips from news stories I’ve been reading about that have led me to these conclusions. I’d like to re-iterate that this is an extremely small sample of the articles that I’m reading. The good news is the public hasn’t caught on – yet!

If history is any guide (it is a good guide at times, at other times it likes to pull pranks on historians) the vast majority of investors won’t be investing until the move is about 2/3 of the way behind us. The techniques that we use to try and capture trends in stocks should allow us to meet our investment objectives a little easier in the next few years.

If you’d like a copy of this report, feel free to email me a bill@bullingtoncapital.com. Thanks for reading!

What would have happened if you retired at the peak of the market in 1987 just in time to see the stock market drop by 30%?

So the market is down 10% or so from its recent high. I have to tell you, that’s that not bad or unusual for this time of year. Last year at this time the market was down from its high in May by nearly 15%. I understand the stress you are feeling, but you have to remember, the stock market is and always has been extremely volatile. And one other thing, successfully riding out these storms is not easy. If it were, everyone would be millionaires.

It’s my opinion that the activity in Washington has been a factor in the recent weakness and is blown out of proportion. After skimming the debt bill that just passed, it appears as though little was accomplished. It had the impact of pushing the tough decisions further down the road and creates further uncertainty. If there’s anything the stock market hates it’s uncertainty. Still, as the old saying goes, “This too shall pass”.  I’ll write or record a post in the near future that explains the potential outcomes for the next few years, stay tuned.

In the meantime, the real drag on the economy( that most people seem to have forgotten), is the horrible weather we’ve been experiencing. North America has been riddled with bad weather and tornadoes for the past few months. If you do a search on Allstate, you’ll find that in their most recent quarter they had over $700 million in property and casualty losses. These are the largest losses they’ve reported in one year since hurricane Katrina! On top of that, the world’s third largest economy is still dealing with the after effects of the tsunami (although Ford and GM’s sales have benefited as a result). It’s not as if you can snap your fingers and fix these problems and no one is even mentioning them in the news. You know what I say? Good. Private sector jobs have been on the rise, the unemployment rate is dropping again, and the pent up demand as a result of the nasty weather should begin to materialize over the course of the next few months. All the while, nonfinancial stocks continue to experience growth and some old economy stocks are doing well.

What does all this mean? I believe the third and fourth quarters will be good ones for the stock market. Will I be right? We’ll see.

In the meantime, feel free to call or write if you’d like to know how I plan to take advantage of upcoming opportunities.

I thought today might be a good day to get started posting on our blog, especially since the market seems intent on dropping! Going forward, I’ll be posting whenever I see something I think may be of interest to my clients and other investors. Stay tuned!