- In this week’s commentary I am including links to interviews on Yahoo and CNBC in which two economic professionals lay out very valid arguments on which direction the economy and stock market will go in the coming months. I recommend you take the time to view both of them.
- Only time will tell if either professionals’ analysis / prediction is correct. I would just hope that instead of either extreme occurring (boom or bust), we just have a gradually improving economy and stock market and very modest corrections along the way. In this environment I believe dollar-cost averaging (investing the same dollar amount over several months) may be the best strategy for putting cash to work.
Bullish outlook
- Investors continued to put money into stocks for a fifth day after a drop in weekly unemployment claims and a spike in oil raised hopes for the economy.
- FedEx Corp., the world’s second largest package delivery company, raised its first-quarter earnings forecast on Friday, citing better-than-expected international shipments and cost-cutting. Every company is benefitting from cost cutting, but the real news is FedEx is seeing better-than-expected international shipments. This is a very positive sign for global economies and stock markets. If businesses and people are shipping items, that is a good indicator that activity is picking up.
- The gains have come even as analysts say the market is overdue for a retreat. The advance followed the Labor Department’s report that jobless claims fell more than expected to 550,000 last week. A jump in oil lifted energy companies and an upbeat forecast from consumer products maker Procter & Gamble Co. added to enthusiasm about an economic recovery.
- Momentum grew in mid-afternoon yesterday as Treasury Secretary Timothy Geithner told a Congressional panel that confidence and stability were returning to the economy after the panic that began a year ago.
- Attached is a video interview featuring Jeff Matthews of hedge fund RAM Partners. He lays out his argument on why the U.S. economy will experience a sharp rebound (i.e., a v-shaped recovery), which he believes that since we had a sharp collapse, then we should have sharp recovery.
Bearish outlook
- Unemployment stands at 9.7 percent and administration officials say it could rise to 10 percent in the coming months. Foreclosure rates are surging and the mortgage market remains tight. Treasury Secretary Timothy Geithner acknowledged that the economy would still face “more than the usual ups and downs.” He also stated, “The classic mistake people make is they declare victory too soon.”
- We have heard that home sales are improving. Unfortunately, Toan Nguyen (IIA’s Director of Operations) relayed this story regarding a relative that has home for sale in Overland Park. Even though the house has had major renovations and upgrades, over the past several months, buyers let alone lookers are nowhere to be found.
- My wife told me a similar story about a gentleman who moved his family to Overland Park; however, they still have a home for sale in Phoenix and it has been on the market for over a year.
- The following video showcases Meredith Whitney CEO of Meredith Whitney Advisory Group, LLC, a macro and strategy-driven investment research firm. In the video she makes a compelling case on why the housing market has further to fall and that this will take a toll on the economy and stock market.
http://www.cnbc.com/id/15840232?play=1&video=1248611242
Even the elite were burnt
The total value of Harvard’s and Yale’s endowments plunged over 25 percent in the last fiscal year ending June 30, 2009 as the Ivy League institutions’ portfolios were battered by the worldwide recession..
Harvard Management Company president and CEO Jane Mendillo said its portfolio was impacted by “extreme volatility and financial dysfunction.” This short-term performance is counter to Harvard’s and Yale’s long-term, superior investment track record that most other endowments, let alone other investors, would love to have.
Upcoming Classes
Our Strategic Life Planning Director, Debra Kunz, MBA, CSLP, continues to speak and teach in the community.
“What Are You Made Of? Self Worth vs. Net Worth”
Debra Kunz is facilitating this program for the American Club Association, “Ignite 2009” series, on September 11. Guests are welcome. Debra shares ways to create your life instead of just react to it. Learn to shift your perspective from living by default to defining what you want; and from fearing the economy to understanding what you can control. Register at www.ignite2009.net.
“7 Do’s and Don’ts to Cope with a Layoff”
Debra Kunz continues to donate this class in the community so it’s free to attend. The information is helpful for those already in transition, or those thinking of making a change. The next session is presented by Grace Covenant Crossroads Church Job Club on Saturday, September 19, 8:30-10:00. RSVP to Debra or Sally, 913-897-2074 or dkunz@iia-kc.com.
Visit www.iia-kc.com/events for more information.
Quotes
“Be able to overcome the adversity and obstacles that will come along. You’ve got to get up one more time than you fall down.”
Homer Drew, college baseball coach
“Honest criticism is the highest praise.”
Anonymous
“Keep looking at the big picture. It is easy to get wrapped up in day-to-day emotion, but you have to control yourself and think down the road.”
Glenn Robinson, college basketball coach
“Every human being should be taught that his first duty is to take care of himself, and that to be self-respecting he must be self-supporting. To live on the labor of others, either by force which enslaves, or by cunning which robs, or by borrowing, is wholly dishonorable.”
Robert G. Ingersoll, orator and lawyer
Tony Moeller, President
Integrity Investment Advisors, LLC
12721 Metcalf Ave., #202
Overland Park, KS 66213
tmoeller@iia-kc.com
913-897-2074
The information listed in this commentary is a compilation of various publicly available sources and is for informational purposes only. It is not a recommendation or solicitation of any particular investment or strategy. A risk of loss is involved with investments in the stock and bond markets.
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