These companies understand that the price of their stock will probably go much higher over time. Pension plans are purchasing huge numbers of shares in our quality companies. Pension plans tend to buy and hold, which also reduces the supply of shares to our general market. Inflation in the United States is at historic low levels, and it is my opinion that inflation will continue under control because of the shift of wealth from Middle America. Remember that a lower standard of living through lower wages will hold inflation in check.
Inflation is constituted about two-thirds by wages.
Technological advances continue to make it possible to produce everything from cotton to satellite launches on a more cost-effective basis with far less labor. Layoffs in higher paying, white-collar jobs continue. The ability of manufacturers to export jobs to developing countries where labor costs are one-tenth of the average U.S. worker should continue to dampen wage increases. Continued low levels of inflation due to continued lower wages is another reason to be positive about our equity markets in the new millennium. Baby boomers are investors, not savers.