Economist James Paulsen often looks back to predict the future. He isn’t always right, but his track record is better than most.

The Iowa State University graduate typically writes one to three newsletters each month for clients of Minneapolis-based Wells Capital Management. He’s been particularly prolific this year, authoring eight reports during the first nine weeks of 2015.

His reports frequently explore situations that seem obvious, but which others rarely pursue. Here’s some of what he’s written this year:

Oil prices: Paulsen’s Feb. 9 newsletter explored the correlation between stock prices and crude oil prices. 

He wrote that there is a strong positive correlation when unemployment rates are high. Lower oil prices depress the stock market during such periods. But that’s not the case with lower unemployment, like now. During periods of low unemployment, the correlation is negative and falling oil prices can stimulate the stock market, as happened last fall, when oil prices fell from $100 to around $60 a barrel and stock market indexes gained 6-10 percent. 

He warned, however, that “a quick or significant revival in oil prices (with broadening evidence of labor market pressures) may prove far more tumultuous for the stock market” during the next year or two.  

Wage inflation: On March 3, Paulsen mused about wage inflation, noting that it has been “remarkably tame throughout this recovery, hovering about a 50-year low of near 2 percent.” 

The absence of wage gains, he wrote, is one reason the Federal Reserve “continues to employ an unprecedented, crisis-like monetary policy with a zero short-term interest rate target.” 

He speculated that many people confuse today’s “nominal” wage gain of 2 percent with inflation-adjusted “real” gains. What they forget, he said, is that overall inflation is low today, making real wage gains higher than at any time since the late 1970s. 

Productivity: Increased capital spending by businesses usually results in increased worker productivity, which in turn generates rising stock prices, Paulsen wrote in a Feb. 24 newsletter. 

That’s what happened in the late 1960s and early ‘70s and again during the technology boom of the late 1990s and early 2000s.

Productivity gains have been below average since 2010, but that could be changing, he said, because U.S. corporations have the cash reserves and pent-up demands needed to drive a capital spending cycle. 

If that isn’t enough to spur capital spending, he added, corporations also know “the supply of U.S. labor is increasingly restrained by aging demographics.” 

Bond rates: “Does a sub 2 percent 10-year U.S. Treasury bond yield make sense today when it never got this low at any point in the Great Depression?” Paulsen asked in a Jan. 27 newsletter.

The current rate “offers virtually no buffer to the current rate of core consumer inflation,” he noted. The only reason rates are as low as they are today, he added, is global concerns have pushed international investors into the U.S. market. And it is unclear when those pressures will relax. 

Small-cap stocks: The stock market “is likely to experience a volatile, but essentially flattish year,” as the recovery enters a new phase that favors consumer spending, Paulsen wrote on Jan. 5. 

One beneficiary, he wrote on Feb. 19, is likely to be small-cap stocks – companies with market values of $300 million to $2 billion. 

Small-cap values have been beaten down in recent years as investors moved more money into larger, blue-chip stocks. Also, he added, “historically, small-cap stocks have done poorly during periods of disinflation and much better during years of re-inflation,” which is what many believe will happen this year. 

If he’s right, it could be a good year for Iowa’s publicly traded companies, all but a handful of which fall into the small-cap stock category.