June 2011 - 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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    • Social Security Insecurity

      As the federal budget continues to be a concern for every American taxpayer, I have noticed recently that there seems to be a lot of confusion regarding the effect of Social Security on the budget process. We know that Social Security and Medicare were set up to be self-funded from payroll taxes, but some of the recent budget debate has centered around the payment of Social Security benefits.

      For example, is the Social Security system currently running a deficit or a surplus? I have seen articles claiming that each is true. I have also read accounts of how paying benefits will increase the deficit, and even that redeeming bonds from the trust fund will increase the total national debt. In this week's E-Letter, I'm going to try to answer some of these questions as well as clue you in on how to read references to these budgetary items.

      On the subject of Social Security and retirement in general, I'm also going to discuss AARP's apparent reversal of its long-held stand against cutting Social Security benefits, and why AARP is now in full damage control mode. Finally, I'll bring you up to speed regarding new proposals to tax and/or confiscate your retirement account assets. In an effort to plug the deficit holes, Congress seems to be willing to make a bad situation even worse.

    • America May be in Its Own "Lost Decade"

      When most people hear the term “Lost Decade,” they immediately think of Japan during the 1990s after it incurred its own financial crisis.Now, however, there are legitimate concerns that the US may be facing its own Lost Decade. In fact, we're already halfway through it. From the 1Q of 2006 to the 1Q of 2011, the US economic growth rate (GDP) averaged less than 1% a year. As I discuss below, we may be looking at a slow economy and continued high unemployment for several more years as consumers continue to pay down debt and curtail spending.

      Clients and readers regularly ask me what it's going to take to get this economy moving once again. Normally the economy is growing at 5-6% by this point after a recession. But there are several dynamics that are different this time, most notably the fact that many of the 10 million US jobs that have been lost over the last few years are never coming back. There are numerous reasons for this, and I will point them out as we go along.

      We will also revisit the issue of the debt ceiling. While the politicians working on this issue say they're making progress on an agreement, there's no hard evidence that the two sides are remotely close to making a deal before the deadline of August 2. While interest rates have been falling due to the slowdown in the economy, things could get quite wild in the financial markets in the weeks just ahead if the debt ceiling is not raised in time. Stay tuned.

    • Teaching Your Kids to Save & Invest Wisely

      Italy was nice, but it's great to be back home. Because of my travel schedule, this week's E-Letter is a topic that we re-run periodically - how to teach your children to save and invest wisely.

      I consider it to be a duty and obligation of parents to teach their children about money, saving and investments. However, you'd be surprised to find that even many adult children of our clients have little or no financial knowledge. While it may be awkward to begin talking about saving and investing with your children when they are adults, it's not so bad if you begin sharing your knowledge with your children when they are young.

      This week's E-Letter will discuss ways to teach your children or grandchildren (or anyone) about saving and investing as well as ways to mentor your children financially even in their adult years. There's lots of good information in this issue, so I urge you to forward it to anyone you feel may benefit from it.

    • Greatest Gift For Your Kids Or Grandkids (Or You)

      Over the years, I have regularly published an article about the Johnson O'Connor Research Foundation. This organization has been instrumental in changing the lives of a number of people I have recommended it to, including my own children. For almost 90 years, Johnson O'Connor has helped individuals match their aptitudes and abilities with the proper school and career path.

      Now that school is out for the summer, this would be a great time to give your high school or college-aged children or grandchildren a leg up on knowing what career might best match their innate aptitudes. Even those who are older and either currently unemployed or not happy in their jobs can benefit from the insight provided by Johnson O'Connor's proven testing.

      Of all of the articles I have ever written, the ones about Johnson O'Connor tend to get the most positive feedback from readers. In fact, we often have individuals call us to ask for contact information for Johnson O'Connor based on their having read about it in the Forecasts & Trends E-Letter. Feel free to forward this week's article to anyone you feel may benefit from it. It could change their lives.