Fear and Trembling

I glad I live in a great country. If any country can overcome what we are facing---WE CAN! I don't want to sound like the sky is falling, but we face enmorous problems.

And most of these problems have been brought by DEBT. Our government is on an unprecedented spending spree that I believe will hold dire consequences for banks, home prices, inflation, bond prices and our future security as a country. Read the articles below to educate yourself.

US Budget Deficit soars to record $1.6 Trillion http://www.cnbc/id/35176678/
The Abyss of Government Spending http://tinyurl.com/yjky5le
Smart Money on the Obama Budget http://tinyurl.com/yhxh9t8
The next bailout/Social Security http://tinyurl.com/yjwz7cg
Banks http://tinyurl.com/ycp3xxx

Yes we can blame Bush..... yes we can blame Obama and his Keynesian philosophy.... yes we can blame politicians who are lining their pockets with treats all around....all we can do now is (1) vote them all out.... (2) get out of debt ourselves and (3) Protect and defend yourself in this market.

JOBS jobs jobs????

"The government cannot create jobs! Only innovators who create products that have value and utility for consumers can create jobs." Mark Matson

IT MATTERS

A 10,000 DOW

Last week, the Dow broke 10,000 for the first time in what seems like forever, but it still has a ways to go to reach it's high of 14,000.
The big question, of course, as advisors is whether it will continue on it's upward trend, or if it's poised to drop back down. Good arguments are available for each opinion. First, the arguments for the bulls:
1) Momentum is on the bullish side.
2) Companies are starting to show good earnings - see Google, JPMorgan Chase, etc.
3) 90% of the mutual fund inflows are going towards bonds, which suggests a strong bull is coming as general investors are notoriously wrong when it comes to their inflows.

Now, here's the bear position:
1) The housing market is still a mess, and can easily take us back into a recession (multiple articles on this one).
2) Banks are still bleeding cash - see Bank of America, Citigroup, and GE's finance arm still losing billions.
3) The Government hasn't yet figured out what fiscal responsibility is, and is burying our country in debt.

So who's right? I’m a bull short term and a bear long term.

Recovery or Recession?

Are We On The Road To Recovery, Or Back To Recession?

Before I share the following articles, I want to go on the record that I'm hoping that we are on the road to recovery. In fact, the Federal Reserve has announced that our economic outlook is "cautiously positive" (http://tinyurl.com/n9dj2l).

However, several signs remind us that we could fall right back into a recession. For example:

1. Corporate insiders are selling like crazy! http://tinyurl.com/m3hen8

2. Consumer credit is down dramatically, which means Americans are spending less, which is 2/3 of our economy. http://tinyurl.com/lub6q9

3. Economist Henry Blodget (with a long and impressive resume), says we will go back into recession in 2010. http://tinyurl.com/kr8lfc

4. And last, but not least, comes a terrific 5 minute video of the challenges that our banking system still has to deal with. When our banking system isn't operating on all eight cylinders, it's like having gunk in our nation's economic engine. http://tinyurl.com/m47vfo

I hope the naysayers are wrong, and things are looking up. Unfortunately, the evidence seems to be pointing against recovery.

True Story!

A prospective client said that the advice their broker gave them was "NOT TO OPEN THEIR BROKERAGE STATEMENT."

When will investors begin to defend themselves?

Some of you may think that I don't believe in investing in the market....I do! But in some traditional ways and in some non-traditional ways. None of my clients lost money in the market in 2008 and I have over 4 million in investable assets under my watch care.

The Broker's Favorite Line

What is the broker's favorite line? "Wait and it will come back" But HOPE IS NOT A STRATEGY--that actually is a good title of a book. The book isn't very good reading but the title is great! Most of you are still being advised that the "buy and hold" methodology is still a viable investment strategy. Did you know that the Dow average was around 8500 in 1998 and recently 11 years later its around 8500. I believe that there is a good chance that it will measure around 8500 in 2020. You need a strategy beyond hope! Money can still be made but with a good chance of a double dip recession in 2010 and the probability of inflation not too long after that....then you really do need a strategy!

A Partial Apology

I really was a little too blunt last night with some retired friends of mine. Their financial situation changed dramatically because they have been and still are fully in the market, waiting for it to come back. Their app. 50% drop occurred because their cheerleader (broker) did not have a "STOP LOSS" on their IRA's--why not? I know they loss about 50% because this particular brokerage believes in American funds. (there are many good American funds, but that's not the point) With passion, and without sensitivity I said, "If you had been my client you would have a least still have what you started with." My friend visibly flinched. Maybe I was being a little arrogant--but it angers me when I see people lose 100's of thousands of dollars. I am passionate about what I do and I wished I had "pushed" them to meet with me...but of course that pushing strategy doesn't work. So I was blunt, but I know I could have served them well! So just a partial apology for probably sounding arrogant.

Get This One Right....

"In your life time, you won't have to get more than a handful of key decisions correct-everything else is just noise." That my friends, is exactly where we stand right now in the market. We are in one of the defining moments where you make decisions that are crucial to your financial welfare. If you think that the credit system is fixed and the market is going to do what it has always done...then you don't need someone like me. We will probably have 2 or 3 quarters of growth and Obama will claim victory, but it will be a premature announcement on the order of Bush's "Mission Accomplished." The storm clouds still hover over the market and the cheerleaders (brokers + Wall Street) are saying "Go long". The inflation v. deflation is the single biggest investment story right now and being on the right side of that trade will effectively secure your investment returns for years to come. Are you looking for an Investment Advisor rep that is considering these factors or do you want a cheerleader?

WHAT YOU ARE LOOKING FOR!

Peter Montoya recently wrote an article that highlighted some interesting facts about high net worth investors. Here are some that I pulled out of his article:

Where do they get their investment advice?
74% financial planner, financial advisor, or broker
37% themselves
27% spouse or family member
23% financial publication
13% television

How often are they in contact with their financial advisor?
36% 1 - 4 times per year
22% 5 - 9 times per year
12% 10 - 14 times per year
4% 25 times +
14% NONE

Topics discussed with their financial advisor
Tax planning
Alternative investments
Estate planning
Emerging markets
Retirement planning
Long-term care

Black Swan

http://www.cnbc.com/id/15840232?play=1&video=1170590726



This guy predicted what has happened to our economy so far....ck out this video. This supports my contention that the financial crisis is not over.

Leaving Professional Management

An article I read recently stated that 70% of those investors with traditional brokerage houses would consider leaving and finding a new advisor. This trend is fueled by several factors.

First, lost trust. Brokers told their clients they were safe and they were not. The recent event showed that these brokers were just lemmings that went over the cliff just like everyone else. The deception and excessive greed became apparent in the 2008 meltdown.

Second: Lack of communication. Most clients don't know what's going on with their portfolio and this crisis made them realize that they needed to be more proactive. A once a year phone call from your broker is not the kind of relationship that is needed in this economic climate.

Third: Availability of Information. Most clients can turn on their financial cable channel and get more information than their broker gives them. Some think they can be self-investors because of the wealth of free information out there. That's a dangerous game...but can be played with help. Most miss the buy and sell signals.

Those that are looking for improvement or better yet ESCAPE from "professional" management need to look at an "investment coach" or to an independent Registered Investment Advisor......