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January 22, 2008
Dear Valued Client: As you are all aware, the market has been experiencing another wild ride reminiscent of 2000 to 2002. Many of you came to my Market Perspective meeting back in August. You might remember that I said then that when I was questioned in June regarding market direction that I told that audience (when the Dow wasn’t quite 13,000) that I thought we would see 14000 and also be in the 11,000’s within 12 months. Well, we’ve touched 14,000 twice (July 19 and October 9) and as I’m writing this we’ve just opened below 12,000. I hate it when I’m right!
So, now what? What’s going on? Where are we heading?
Regarding “What’s going on?”, FEAR is driving the market; but Fear of what? A recession or worse, a weak dollar, the price of oil, higher taxes, lower taxes, health care costs, financial lendor instability? While I’m certainly not an Economist, I’d at least like to give you my opinion. But, first of all, my perspective: as I was awake in the wee hours this AM watching foreign markets and our Futures Markets and worrying that many of you will be worrying, I must confess I was uneasy to say the least. By the way, not uneasy because I think the sky is falling but because I know many of you listen to the news and will believe it is falling. I know markets go up and markets go down. Said that to say my devotions today were in Psalm 127:1&2. As I read, I thought I should have slept last night because we have been prayerfully managing accounts seeking Divine intervention. Obviously, we have a little short circuit in our reception since we are down; but being down less than 50% of what the market is down with still having market exposure, shows our team is doing right things.
Now, let’s look at a weak dollar. We hear in the media about how bad a weak dollar is. For whom? A weak dollar makes purchasing foreign goods more expensive. It makes foreign travel more expensive. But, what else? It makes US goods more attractive to foreign purchasers. (Therefore, our EXPORTS are Up!) When foreigners are purchasing US goods, US jobs are created! When the dollar is cheap, foreigners travel to the US for vacations because it is cheap. Let’s see, creating more US jobs and US travel? Isn’t that a good thing?! Buy American!!! Oil? $3 gasoline versus $2 gasoline for a person driving 12000 miles per year at 20 MPG – the difference is $600 per year! That’s not the end of the world even though I don’t like it anymore than you do. Financial lendor instability and credit companies? They loaned people money they should have never loaned money to. When they’ve made bad business decisions, I believe they are accountable for their actions and shouldn’t be bailed out! I made a bad judgment decision years ago and didn’t seek a bail out. We suffer the consequences of our actions. Taxes?? Ronald Reagan’s tax cuts brought more revenue to the treasury – not less! Bush’s tax cuts brought more money in – not less. The problem is that spending wasn’t controlled!! Bringing in $x more and spending $x+ doesn’t work for our budget or the Federal government. When we are listening to all of these political promises and pledges – more entitlements and less tax on the poor – think about how this can possibly work. It can’t! A married couple 65+ pays NO FEDERAL INCOME TAX on $19,600 and their Social Security is not taxed. A young couple with 2 children less than Age 17 pays NO FEDERAL INCOME TAX on their first $42,850 of income!! Remember the old Pogo cartoon??
Anyway, so much for my perspective or Rant as the case may be. We must keep everything in perspective. Government spending is out of control. Higher taxes on the people who are already paying all of it, might kill the proverbial goose. So, what can we do? Don’t panic and Buy American!! (If you can find anything made in America.) Why have all of these foreign products come into America? Because, we put “cheap” in front of “American stability”. We must have balance. And, we must all do our part!
When USA Today says Americans are fleeing the market, what does that really mean? IT means that many people are so afraid that they will sell at any price to get their money. What’s the flip side? Someone ELSE IS BUYING!! You can’t sell if someone else isn’t willing to buy! IF your fear is greater than their greed, they simply get really good buys and you make really bad trades!
So, what have we been doing?? Please read the following to see. Bear in mind, Kregg wrote the following to share with our Advisers so some of it is not applicable. BUT, please read.
Sincerely,
Mick
PS Please pray that we have Godly Wisdom.
MO/csc
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