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

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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 —

http://www.boston.com/business/articles/2008/07/06/portfolio_manager_casts_an_optimistic_eye_on_economy/

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