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Examiner
  • Ron Finke: Strong performance in several sectors

  • While we have enjoyed the national holy days in relative peace and prosperity, we have awaited the outcome of Washington brinkmanship to see if 2013 will bring more economic recovery or the next recession.

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  • While we have enjoyed the national holy days in relative peace and prosperity, we have awaited the outcome of Washington brinkmanship to see if 2013 will bring more economic recovery or the next recession. The most positive observation I can make is that we have created our own successes for over 200 years now, all the while complaining about our president and Congress.
    I thought it might surprise you to look in the rearview mirror to see what industries’ stocks have been winning the battle this year. There were 14 industry groups that were at least 40 percent higher through last Friday, the 28th.
    The three dominant sectors were health care, consumers and construction (including materials). Lumber/wood production, a small group of companies, produced the greatest average gain, 79 percent. Wholesale building materials was second with 76 percent, followed by home improvement stores, residential construction, and apparel stores – all higher by more than 50 percent.
    Despite exaggerated rumors of their demise, construction and materials companies have obviously made a tremendous recovery from admittedly low points of the past three years. I can personally testify about the change. When we broke ground for our new home in May, we had to wait three weeks for a desirable framing crew.
    According to Nate Minnis of House & Renner, Blue Springs, good framers are now behind by six weeks or more. New construction electricians and plumbers are backed up as well. Is this for real?
    Love, marriage and new-home formations have been continuing during the housing downturn. New single-family home inventories nationwide have dropped to 4.7 months of supply, not much higher than the average during the boom before 2005. The Case-Schiller housing index of the 20 largest metro areas shows prices rising now at an annual rate of 7.3 percent, led by Atlanta, Las Vegas, Phoenix and San Diego. This data comes from Chief Economist Brian Wesbury of First Trust Advisors, Dec. 27, available at ftportolios.com.
    By the time you read this, we will all know whether our taxes have just gone up by over $500 billion for 2013, even if temporarily. The Republicans will be hammered for whatever happens, so if I were them, I might just give up and say this. You win, Mr. President. We will raise every tax you have ever wanted. Then we can find out once and for all if that tactic works or if we will fall back into recession. (By the way, raising taxes worked so well in the 1930s, it took a decade and World War II to pull us out. But that was then and this is now, right?)
    Remember that someone is always making money, even in bad times. That might be in other countries though. Smart money goes where it is wanted and rewarded. Be flexible and nimble in your approach. That is my plan for 2013.
    Page 2 of 2 - Past performance is no guarantee of future results. Market data from Worden Brothers, Inc., TC2000, 2012.
    Ron Finke is president of Stewardship Capital, a registered investment adviser. This is general advice and not meant to contain specific recommendations. Reach Finke at rcfinke@stewcap.com.
     
     
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