The New Era of Wealth : How Investors Can Profit from the Five Economic Trends Shaping the Future

First, the good news: smart investors will continue to get rich. Brian S. Wesbury, an economist and respected economic forecaster, believes the trends that led to so much wealth creation in the last two decades of the 20th century--a boom in productivity from technological innovation, smaller government, and anti-inflationary U.S. Federal Reserve policies--will continue in the first two decades of the 21st century. As Wesbury sees it, people who worry about the soaring stock market leading to a repeat of 1929 are looking for the wrong bogeyman. He argues convincingly that policy mistakes caused the Great Depression. Furthermore, he doesn't even believe stocks were particularly overpriced in the late 1920s, just as he doesn't believe they are in 2000. He views the dark days of the stock market from the mid-1960s to the early 1980s and the Japanese economy in the 1990s in much the same way. Where some see the brass knuckles of fate punching the lights out at the end of the party, Wesbury sees flawed governmental policies ruining brilliant economic expansions. He also shows how to cash in on the continuing good times. He says mutual fund investors, for example, should have a portfolio that's 50 percent index funds and 50 percent sector funds that buy new-era biotechnology and Internet stocks.

And now the bad news: just as a shift in governmental philosophy in the early 1980s helped the economy turn around, so could future shifts put the economy in reverse again. Wesbury cautions readers to be on the lookout for protectionism, tax increases, and excessive government regulation. But he also makes clear he doesn't believe those things will happen, that history has taught us valuable lessons we now know how to apply. If The New Era of Wealth could be summed up in one sentence, it might be: Economic disasters of the past don't have to serve as prologue. Wesbury's faith in the ability of humans to absorb such lessons makes this book a joyful read for the optimists among us. --Lou Schuler