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Why Ford (F) and economic growth stocks could go higher

Brian Hunt
0 Comments|August 5, 2013

When the economy grows, businesses and consumers are more likely to buy cars and trucks.
It didn't take long for Ford Motor Co. (NYSE: F, Stock Forum) and the "big shift" to start producing big gains...
Two months ago, I showed you how investors are getting more comfortable with buying stocks that benefit from economic growth. This is an important shift... one that could make you a lot of money over the next 12-24 months.
As longtime readers know, in early 2012, we predicted that money would flock to the safest dividend-paying blue chips, like Wal-Mart Stores (NYSE: WMT, Stock Forum), Johnson & Johnson (NYSE: JNJ, Stock Forum), and Procter & Gamble (NYSE: PG, Stock Forum).
These are the safer, "defensive" names money managers buy when they are wary of the broad market and a struggling economy. We figured their buying interest would lead to a "momentum trade" in dividends.
The prediction was right on. Stable dividend-paying blue chips have soared. Johnson & Johnson climbed from $65 per share to $88 today. Procter & Gamble climbed from $65 per share in mid-2012 to $82 today.
But as we pointed out in June, we're seeing the "defensive" blue chips outpaced by companies that are more sensitive to economic growth, like Ford Motor Co.
This is the "big shift."
Ford is one of the poster children of the "economic growth" trade. When the economy grows, businesses and consumers are more likely to buy cars and trucks. So the "big shift" could push shares much higher from here.
We know many folks will write in to say, "Yes... but it is 'fake growth' conjured up by the Federal Reserve and its money printing."
That might be true. But the market likes the growth story... whether it is real or fake. It's pushing the value of Ford and similar stocks higher and higher. The trend is up. And trends tend to last longer and run higher than most people think is possible.
If you took our advice and opened a position in the "economic growth" trade, stay long. A short-term correction could temporarily push shares lower, but the long-term trend is up... and more gains are likely on the way.

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