Stocks are the savviest investment bet in 2012, especially buying sound, dividend-paying companies, economist and author Mark Skousen tells Newsmax.TV in an exclusive interview.
"We've actually sold our gold and silver positions. We are recommending mining stocks and energy stocks," Skousen says.
Gold has been rebounding lately due to seasonal Chinese demand but that won't last for long.
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Fundamentally, however, stocks remain oversold, especially considering the economy is at the cusp of improving even if at a sluggish pace.
"I think the better place to be is in stocks. If you look at stock indexes across the board, they are all selling at very low multiples,” said Skousen, a columnist for Franklin Prosperity Report, published by Newsmax.
“The U.S. S&P 500 is currently selling only at 13 times earnings. Traditionally it's 17 to 18 times earnings. They are deeply undervalued. I am more positive on stocks but I would emphasize dividend-paying stocks in quality companies as the best way to go."
Recovery could accelerate if the Obama administration would ease up on slapping regulations and taxes on the one area of the economy that needs it the less: businesses, especially smaller ones.
"Business is basically facing a lot of uncertainty about taxes, the burden of Obamacare that is coming down the road is a negative, the regulations from Dodd-Frank are kicking in. All of these are putting a burden on business, which is, I think, the main reason why we're stagnating as an economy," says Skousen, who edits the investment newsletter Forecasts & Strategies.
"If we slash taxes, got rid of wasteful regulations and government bureaucracy that is stifling business, and entrepreneurship in particular, then I think we could recover rather quickly."
Unemployment rates officially stand at 8.5 percent although the figure would be much higher — closer to 20 percent — if discouraged workers were factored into the labor force, Skousen says.
Unemployment rates base the labor force on those out of work but are out seeking jobs, so those who have grown weary of fruitless searches and have resigned themselves to joblessness or part-time work don't count, hence a lower percentage headline rate hitting the wire every month.
Still, the labor market is getting better, and so is housing.
"There is some evidence of a bottoming pattern but from a very low level, and we are far from the 2007 level," Skousen says of the housing sector, pointing to gains in housing starts as an example of improvement.
Privately owned housing starts in November hit a seasonally adjusted annual rate of 685,000, up 9.3 percent above October and up 24.3 percent from November of 2010, according to the U.S. Census Bureau's latest figures.
Turning to Europe, where fears of a Greek default are growing, Skousen sees trouble ahead but in the end, the continent's leadership will eventually navigate the economy to calmer waters.
"I think it is going to be messy but I am optimistic that Germany and France, the countries that are really in charge of the eurozone are desperate to keep it all together."
Skousen will host the Global Financial Summit scheduled for Feb. 1-4 in Nassau, the Bahamas, entitled "Market Solutions to World Problems."
The summit serves as an alternative venue to the World Economic Forum held in Davos, Switzerland.
"This is an establishment gathering in Davos, Switzerland every year. A lot of those people, it's their recommendations of Keynesian deficit spending that has created this debt crisis that we are facing. So we decided to have an alternative to Davos in the warm Bahamas rather than freezing Switzerland," Skousen says.
Guests include journalists, experts from think tanks like the Cato Institute and the Reason Institute, CEOs, financiers and many more.
Details are available at www.freedomfest.com.
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