Heebner, "I’m a bull on the U. S. economy"

By on July 8, 2008

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.


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 —


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