September 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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    • The Economy & the Commercial Real Estate Bust

      This week, we take a fresh look at the latest economic reports, most of which have been positive and suggest that the recession is over and the economy is rebounding. Still, I expect that economic growth will only be mild in 2010, as I discuss in this week's letter.

      Our larger topic this week is the huge problem with commercial real estate debt, which could be the next shoe to drop in the credit crisis. Commercial real estate values have plunged apprx. 39% nationwide since the recession began, and some sources believe prices could fall another 20% or so before stabilizing. This is huge, but we don't hear a lot about it, even though banks are failing at an alarming rate as a result. This is a major problem you need to be aware of, so let's get right to it.

    • Healthcare Reform or Government Takeover?

      President Obama addressed a rare joint session of Congress on September 9 when he spoke at length about his desire to substantially reform America’s healthcare system. Whether you are among the apprx. 56% of Americans who now oppose the healthcare reform bill in the House, or you are among the apprx. 43% who support it (latest Rasmussen poll), it is important to know the facts - a number of which the president failed to address or misrepresented in his speech.

      While I have refrained from writing at length on the healthcare reform debate, I feel the issue is just too important, and too politically charged, not to speak out. In the pages that follow, we will delve into some of the biggest problems and challenges with the House healthcare bill, H.R. 3200 - America's Affordable Health Choices Act of 2009. Given that there is so much misinformation on healthcare reform out there, on both sides, maybe this will help.

    • The Case for High-Yield Bonds

      High-yield bonds, otherwise known as 'junk bonds,' have enjoyed spectacular gains so far in 2009. Both the Barclays and Merrill Lynch high-yield bond indexes are up over 40% year-to-date as of August 31st, and inflows to high-yield bond mutual funds is at or near record levels. What these investors may not know, however, is that high-yield bonds, besides having a higher risk of default, also have a higher correlation with equity markets than other types of bond investments. As a result, high-yield bond investments can be very volatile.

      Fortunately, there is a way to invest in high-yield bond mutual funds within an active management strategy that can go to cash when the high-yield bond market turns negative. This week, I'm going to feature a whitepaper on high-yield bond investing by Steven D. Landis, CFP, co-founder of Sojourn Financial Strategies, LLC. Steve's paper will not only provide some valuable background on high-yield bonds, but will also discuss why an actively managed high-yield bond program may still be a good investment in 2009. After that, I'll discuss Sojourn's Columbus High-Yield Bond Program that Steve manages. I think you'll find this program to be a viable way to introduce additional diversification into your investment portfolio.

    • On the Economy & Obama's Trillions

      Most (but not all) of the economic reports over the last month or so have been positive, and more and more forecasters now believe that GDP growth will be slightly positive in the 3Q. Unfortunately, we don't get our first 3Q GDP estimate until the end of October. The latest GDP estimate for the 2Q was unchanged at -1.0%, which was better than expected. I will cover the latest encouraging (and not so encouraging) economic news just below.

      Next, on Friday, August 21, the Obama administration quietly announced that the White House Office of Management & Budget revised upward its long-term federal deficit projections to fall in line with those of the Congressional Budget Office. The White House finally admitted that its economic assumptions were too optimistic - to the tune of $2 trillion over the next 10 years. So now it's official - even President Obama admits he will more than double the national debt in the next 10 years, which will likely lead to another financial crisis.

    • A Case of Mistaken Identity - The "Other" Gary Halbert

      The Internet is a wonderful thing, but it can also be very frustrating when there is a case of mistaken identity. I have written a number of times about another 'Gary Halbert' that appears when readers do a web search on just my first and last names. And even though Gary C. Halbert died two years ago, he still has a very prominent presence on the Internet. So prominent, in fact, that I don't appear on most searches until somewhere on the second page of links.

      If that's not bad enough, Gary C. Halbert has a number of very unflattering posts related to his activities when he was living. Whether these are accurate or not, they create a problem for me if my current or prospective readers or clients were to think these negative posts are about me. This week, I'm going to again discuss why it's always important to use my middle initial "D" when you do a web search on my name. I'll also provide some background information on myself and my company so that you can feel more comfortable with the person writing to you each week.