Ladies and Gentlemen, Boys and Girls of all ages! Please turn your attention
to the main ring and welcome
back, after a successful international road trip, that slippery villain from
your distant past, that master of
the shrinking dollar, the godfather of price controls, the specter of
Republican Administration replacement surgery, and figment of a frantic media's
irresponsible sensationalism. Yes, folks, back for a return engagement, your
very
worst nightmare...that infamous scoundrel...INFLATION!

What's that? You're not falling for this new dark comedy? Fool!
Gasoline prices are at
historical highs. How is the Mrs. going to hit all the Malls at just
9.7 miles per gallon?
You better believe this is inflation, and it's Washington's fault,
them and their Oil
Company Cronies....

And so it goes, the beginnings of a new economic crisis. Finger pointing,
blaming, scapegoat finding, you name it. And Wall Street? "New strategies for an
inflationary environment"; Seminars; Lists of stocks that
will benefit and others that will suffer. Boring economists theorizing on
radio talk shows and network television. We've all been there before, and we're
not about to go back. Get real. Wake up. Refuse to be
manipulated! As high as oil prices are, they are still lower by far than
anywhere else in the world. Health
care costs have never stopped going up, but you'd have to deal with consumer
fraud, greedy lawyers, ignorant juries, and longer life expectancies, and some
pretty impressive lobbies to do anything about that.

The fact that you've learned to like expensive restaurants, Hummers, Jeeps
with Mercedes Logos on them, and Single Malt Scotches is not inflation. These
are indicators of an improved life style. Inflation is: "The
overall general upward price movement of identical goods and services in an
economy as measured by a
Consumer Price Index and/or a Producer Price Index. As the cost of goods and
services increase, the
purchasing power (not the value, which might just react in reverse!) of a
dollar is deemed to fall because a person won't be able to purchase as much as
in
previous years. The annual rate of inflation has fluctuated greatly over the
last half century, ranging from zero inflation (most recently) to as high as
23%. It's calculation is always accepted without challenge, just like the
sanctity of the DJIA!

The Federal Reserve Board tries to maintain the rate of inflation, at a level
that is typically between 2-3%.
Deflation, which is the reduction in the general price level and not
generally considered to be a good thing, is what the Fed was actually concerned
about
just a few months ago! Go figure, and just wait until

you hear about the inflation proof products and gimmicks Wall Street prances
out for the "savvy investor". Is a pencil with an eraser worth 3% more than
one without? If an airline ticket is the same price,

but without the meal, is there inflation?

The Consumer Price Index (CPI or Cost of Living Index) measures the change in
the cost of a fixed basket of products and services, including housing,
electricity, food, and transportation, and so on. Housing costs are up because
interest rates are down. Transportation costs are up because of oil prices,
mandated vehicle improvements, demand for bigger, faster & fancier, and
insurance
costs. Oil prices are up because of War, Weather, Demand, and the refusal to
develop alternatives. Electricity hasn't made it to the
newspapers yet, but oil prices do have an impact there as well. But which way
are the prices of cell phones, computers, and so many other items going? With
the growth of the world economy, and stiffer

foreign competition, how much flexibility do companies have to raise their
prices if they want to remain competitive? If interest rates actually do go up,
causing housing prices to fall, won't that lower inflation?

Can anyone really figure all this out without one shred of actual fact to
work with? Why is it OK for you

to shop around for the cheapest lawn service but not OK for a business to
reduce it's local taxes or labor

costs? The Producer Price Index (PPI) is a second inflation indicator with
about the same number of variables going into it's make up. No, I can't put all
the pieces together either. No one can, actually.

Least of all the thousands of economists who spend tens of thousands of head
scratching hours annually trying to figure out what it all means. No two of
the thousands of well known economic experts in the

world ever agree on anything, and none of them will ever even express an
opinion that isn't hedged with or couched in at least a dozen ifs, ands, and
buts.
But here we have the infinitely prescient media (and every brokerage firm's
Chief Economic Analyst) out in front of the facts, predicting rampant inflation
and the demise of the free world all because some network news anchor had to
break a $50 bill to fill up his Escalade! It's not the oil companies, it's the
price of security and of a life style that most of us want to keep intact.
And it's not a new environment or one that is particularly difficult to deal
with...if you eliminate the Street noise.

So don't let that hungry Financial Advisor convince you that it's time to
shift or to rearrange your investment portfolio because of what his or her
firm's
economic braintrust see on the horizon. It's not. If
interest rates go up, that's good news! You'll earn more with reinvestment
dollars. (If you don't have any,

blame the advisor, and if you haven't refinanced during three years of
falling interest rates, don't blame

the White House or the Oil Companies.) If inflation comes in above 3% in
2004, you'll survive, and maybe

even learn from the experience.

Everything economic and financial has its cycles and, unfortunately, their
timing cannot be predicted.
(Yeah, I know...your guy thinks that he can predict the future!) Success
depends on being able to take advantage of the cyclical movements, and the
secret
is to have a simple plan. The Wall Street Plan is to sell low and to buy high
(or new, it's the same thing). Not a Plan that works real well...ever.

There is a book you should read...


Steve Selengut
steve@...
800-245-0494
-----------------------------------------------
Buy "The Brainwashing of the American Investor"


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