By Zach Scheidt
This post Citi’s “Trickle Down” Payments Are Just The Beginning… appeared first on Daily Reckoning.
“Do NOT fall out of the boat!!”
I was 17-years old and thought I was invincible. My class was on a white water rafting expedition and I was cutting up at the front of the boat. That’s when I saw the pale look on our guide’s face.
I can still remember the tension in his voice as he barked out the orders for our next set of rapids.
“Diamond Splitter is a class four rapids! And the next one — Hell’s Hole is a class five. If you fall out of the boat you will drown. Do NOT fall out of the boat!!”
That was enough to get my attention. I wedged my foot under the edge of the boat and held on for dear life.
When we emerged from the back-to-back rapids I was soaked. But safe. And full of adrenaline. What an amazing ride!
The first few weeks of 2018 have been similar for investors. Stocks took the solid gains from 2017 and added turbo speed! The first six trading days of the year represented the best start for markets since 1964. And in the first two weeks of trading, the S&P climbed at a rate that would cause the market to triple by the end of the year.
Talk about class five rapids!
Well, if you’re worried that this market is becoming too hot to keep your money invested, I’ve got one piece of advice for you…
Do NOT fall out of the boat!!
There are many reasons why this market should continue to rally. And you don’t want to be caught sitting on the sidelines while stocks keep climbing!
The Trickle Down Effect — Niagara Falls Style!
Economists have a term for chain reactions in the market. It’s called the “trickle down effect.”
Here’s how it works…
A positive thing happens in the market to drive initial gains. Maybe it’s a stimulus package that pays for infrastructure projects. Maybe it’s a tax cut. Or maybe it’s a technology advance that drives productivity.
The initial “drip” could be fairly small. But the chain reaction can eventually lead to much larger benefits.
For instance, a small-town street renovation requires a handful of new paid laborers. Those workers then spend more money at local retailers. Meanwhile, better roads bring more traffic through a town – helping to accelerate retail sales.
Over time, the retailers hire more sales staff and buy more products from nearby manufacturers. Those manufacturers have to ramp up production which means new hires. The owners of the manufacturing companies collect more profits and decide to build a local golf course.
That golf course hires more people and attracts more tourism. And on and on the story goes.
The trickle down effect from one small infrastructure project can lead to much bigger gains for an entire community.
This trickle down effect is exactly what we’re seeing in the markets today. Only instead of a stream of economic growth, we’ve touched off a torrent of profits comparable …read more
Source:: Daily Reckoning feed
The post Citi’s “Trickle Down” Payments Are Just The Beginning… appeared first on Junior Mining Analyst.