For those of you who have followed me you know I like to keep things simple and disciplined. My background in accounting and law forces my thinking process to take data, analysis it and then try to decide on a course of action. Before I push the buy button I need to know:
1 - How is the economy doing?
2 - How is the stock market doing?
3 - What stocks have the most consistent price appreciation in the present economic and market environment?
4 - Which individual stocks meet my minimum criteria to add to my portfolio?
There is just too much economic information out there and the more I research the more confused I get. Put two economist in a room and they will issue 5 different opinion papers. To cut through all that confusion I have come to rely on the Conference Board's Leading Economic Index. It's published once a month and consists of a Leading Economic Index (LEI), a Coincident Economic Index (CEI) and a Lagging Economic Index (LAG). Since there are only 21 components on the report I'm not buried in so much data that I get confused.
I'd like to summarize the report to make it simple but have added a link to the complete report so you can make your own conclusions:
1 -- LEI is up for the 7th straight month -- this month by .3% but residential building permits are still a major weak point.
2 -- CEI is flat and basically has been since June -- GDP expanding with industrial productivity up and the employment indicators down. Sounds like we are doing more with less and hopefully getting more efficient.
3-- LAG is still declining with 2 indicators up and 5 down but the rate of decline is slowing slightly with the biggest problems in commercial and industrial loans outstanding.
The roller coaster has reached the bottom and starting to come back up. I'm confident that I'll be seeing positive but not significant price appreciations until the middle cars on the roller coaster climb out of the trough.
I look forward to next month's report due to be released Thursday December 17th at 10:00 AM
Jim Van Meerten is an investor who writes on financial matters here and on Financial Tides. Please leave your comments below or email FinancialTides@gmail.com