Heebner, "I’m a bull on the U. S. economy"
Ken Heebner, considered a fantastic fund manager and generally smart guy by many, in an interview published by the Boston Globe a couple of days ago, expressed his optimistic view on the economy.
Excerpt:
What do you expect US growth rates to be? And inflation?
Our economy will surprise us on the upside, growing between 2 to 4 percent over the next 12 months. I’m a bull on the US economy. Clearly housing has been a negative, but there’s only four states where they walked housing prices to Never Never Land, and now it’s coming back to a realistic level. Because of increasing demand from these developing economies, I can see, three years from now, inflation approaching 10 percent.
How can you be such a bull on the economy and say inflation could be such a potentially big problem?
I didn’t say it’s a big problem. In the 1970s and 1980s, when inflation was high – we made good money investing in stocks in that period. I’m running a portfolio. I’m not running the country. The challenge inflation presents is that price-to-earnings ratios tend to decline. So when you invest money, you want to have enough growth to offset that compression.
The complete interview —