May 2009 - Forecasts & Trends

Forecasts & Trends is much more than just investment blog posts. You need to know the "big picture;" you need to have a "world view," especially in the post-911 world; and you need more information than ever before to be successful in meeting your financial goals. Gary intends to help you do just that.

Forecasts & Trends

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  • Why This Recession Could Last Another Year

    While we have seen some encouraging economic data over the last month or so, the vast majority of reports remain negative. The housing slump is getting worse, not better, with home prices plunging a record 19% in the 1Q. The home foreclosure rate skyrocketed 46% over year-ago levels in March. Meanwhile, millions of adjustable rate mortgages (ARMs) are going to "reset" to higher monthly payments over the next couple of years. And finally, the default rate on commercial real estate loans and mortgages is rising rapidly. All of this reinforces my view that this recession will last all year or longer, and this is bad news for the credit markets and the stock markets. Don't be fooled by all the talk of "green shoots" in the economy. We are not out of the woods yet....
  • Retirement Focus: Spotlight on Good News

    This week, Mike Posey resumes his Retirement Focus series of E-Letters by calling attention to the positive things happening in the retirement planning market. Yes, there is a lot of bad news floating around out there, but Mike's analysis shows that there are opportunities awaiting those who recognize and act upon them. As part of the good retirement planning news, Mike will introduce a new actively managed 403(b) program that we are researching. This investment option is offered by Potomac Fund Management, one of our most trusted Investment Advisors. While our due diligence process is not yet completed on this product, we feel confident that we will soon be able to offer this program to those of you who participate in 403(b) programs and have the Fidelity family of mutual funds as an available investment option.

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  • Carbon Emissions: Environmental Or Political Issue?

    I don't know if you've noticed, but the global warming issue is now increasingly referred to as "climate change." Believers say that the new name conveys the idea that there are more changes in store than rising temperatures. Critics, however, say that the name change was necessary because the warming has ceased in recent years. Whatever your opinion on climate change, it's likely that you've noticed that it is a polarizing issue, with most people being either adamantly for or against taking steps to reduce man-made greenhouse gasses.

    I will not even attempt to enter the fray of whether or not climate change is the result of human activity. What I do know, however, is that the economic consequences of trying to reduce greenhouse gasses is going to cost a lot, and most of the money will come from the pockets of American taxpayers either as taxes or increased costs of goods and services. With that in mind, this week I'm reprinting an excellent article from Peter Huber. He addresses the likelihood of meaningful reductions in greenhouse gasses when only developed countries are required to participate. No matter where you stand on the climate change issue, I think you'll find his analysis to be thought provoking....
  • On The Economy, Bonds & Bear Market Rallies

    Last Wednesday the government reported that 1Q GDP declined at an annual rate of 6.1%, thus confirming that we are still in a deep recession. While the GDP report was worse than the pre-report consensus, it was very much in line with what I predicted in my April 21 E-Letter. I continue to believe that we will be in this recession all year.

    Several recently released studies highlight the fact that long maturity Treasury bonds have outperformed stocks over the last 40+ years, and by a substantial margin over the last 28 years. I will examine these reports as we go along. Does this mean you should put all of your money in bonds now? I'll tell you why I believe that would be the wrong move to make at this time.

    Finally, we get calls every day asking if the recent rally in the stock markets means that the bear market is over, or if this is just a bear market rally. While no one knows for sure, we will take a look at some past bear market rallies to keep things in perspective. I think you'll find this week's letter interesting....