Investor CAFÉ

Skousen CAFE: Romney’s Revenge: Private Equity Stocks Soar

“Free enterprise has done more to increase the standard of living of Americans than all the government programs combined.”

– Mitt Romney

I am speaking at the Investment U conference this week in St. Petersburg, Fla., and the focus is mainly on income-producing stocks and funds. We had a big panel discussion about whether dividend-paying stocks now are so popular that they are overvalued and whether interest rates will rise and cut off the bull market on Wall Street.

The Dow has been hitting new highs for the past week, and now the S&P 500 Index is about to hit a new high.

I told the audience that I thought interest rates had bottomed out and were headed higher. I urged investors to sell their Treasury and corporate bonds and buy into private equity stocks that are paying big dividends. In other words, invest like Mitt Romney in Bain Capital-like stocks that trade publicly. Bain Capital is a private firm that does not trade publicly, but there are many private equity firms that do trade publicly and are doing as well as, if not better than, Bain. See my newsletter, Forecasts & Strategies, for specific recommendations. One stock is up more than 60% per year for the past five years, and already is up 13% this year — and still is selling for less than 10 times earnings, and has a lot more ways to go.

Despite the Dow hitting new highs, there is plenty to worry about. This recovery is largely artificial, propped up by the Federal Reserve’s easy-money policies.

I showed the Investment U audience our 2 1/2 minute video of “Are We Rome?” and everyone was moved by it. Check it out here: http://vimeo.com/45821274. That’s our theme for this year’s big show FreedomFest, “the world’s largest gathering of free minds.” John Stossel is coming this year and taping his Fox News show there on July 11. We are meeting at Caesars Palace in Las Vegas, July 10-13, and we are getting a HUGE response with nearly 1,000 people already signed up. Steve Forbes comes all three days! In attendance will be more than 150 speakers and exhibitors.

And one of the attendees here at the IU conference said she loves FreedomFest so much that she takes a 15-hour flight from Argentina to get to Las Vegas; it’s worth every penny.

But hurry. The early bird special ends this weekend on St. Patrick’s Day, March 17 — save $100 per person, $200 per couple, by signing up now. Go here: www.freedomfest.com, or call Tami Holland at 1-866/266-5101.

You Blew It! ‘There Is No Debt Crisis’ — Really?

“We don’t have an immediate crisis in terms of debt. In fact, for the next 10 years, it’s gonna’ be in a sustainable place.”

– President Barack Obama

“What, me worry?” is the apparently attitude of President Obama when it comes to the national debt and the deficit.

We currently have $17 trillion in debt, more than 100% of our gross domestic product (GDP), approaching World War II levels.

But the president says there’s nothing to worry about. Speaking with ABC News correspondent George Stephanopoulos, President Obama downplayed concerns of an impending financial catastrophe, claiming quite to the contrary that the country is on track to turn the economy around.

But there’s always danger when a nation has no backbone in fiscal responsibility. The problem is that interest rates are so low that financing the deficit and the national deficit is easy right now. That situation could change when interest rates rise sharply. Then everything will get out of control and the president will suddenly play a different tune.

According to the Congressional Budget Office, the deficit is expected to fall below $1 trillion this year, but will get worse after that, with a total of $7 trillion expected to be added to the national debt during the next decade. By then, the entitlement crisis will be full blown and we will be in real trouble.

Ben Franklin said it best: “Revenue is never sufficient without economy.”

To read my e-letter from last week, please click here. I also invite you to comment about my column in the space provided below.

Gloria libertas, AEIOU,

Mark Skousen
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