There’s a lot of news out there about what’s happening in the world markets and here in the U.S., so here’s a round-up of news and views on what’s going on out there:
If you’d like to find out more about how we can help you and your money face upcoming challenges, act now by listening to the Monday Morning Market Outlook podcast, and then by giving us a call at 800-391-1118.
As always, email any investment questions or concerns to askdoug(at)dougfabian(dot)com. We want to help you make the best possible decision for your portfolio. This is a podcast summary. For more information, please listen to the entire broadcast here.
Amazingly, the highs in the Dow are seen as the big story around the world. These new highs come at a price, however, and that’s what we need to talk about today.
Most investors believe inflation will be a big problem because of the Federal Reserve’s tampering in the market through Quantitative Easing. They are worried about the value of US dollar, commodities, healthcare, higher taxes, etc.
On the other hand, we could see deflation, which, frankly, we are more concerned about. If all of this money printing doesnt result in economic growth, than the economy will contract. Stocks usually advance ahead of economic growth so everyone is hopeful, but you need to be prepared for both inflation and deflation at the same time in your portfolio. Both could harm investors, and we don’t know, at this point, which way the economy is going to go.
Deflationary consequences:
Job losses
Assets deflate
Debt defaults
Inflationary consequences:
Devaluing of US dollar
Expensive gas, commodities, food, healthcare etc.
Sovreign debt defaults are going to come at some point and restarting economic growth is going to be very difficult if that happens, particularly in Europe. Our advice is this: prepare for an uncertain global economy, and ready your portfolio for both inflationary and deflationary action.
If you’d like more information or guidance on how to do that in your personal portfolio, please email us at askdoug(at)dougfabian(dot)com.
This is a podcast summary. For more information, please listen to the entire broadcast here.
We’d like to direct your attention to a very important article in the Los Angeles Times from this weekend:
“Has the bull market in stocks become ‘too big to fail’? The Federal Reserve’s efforts to keep the U.S. economy growing may not work unless the stock market keeps moving higher.”
“Officially, the Federal Reserve isn’t supposed to worry about keeping stock prices flying high.
But when Fed Chairman Ben S. Bernanke was asked about the market’s outlook last week on Capitol Hill, he sounded like a lot of bullish Wall Street investment strategists.”
We encourage you to read the whole article here, and remain alert and informed in the markets right now.
This is a podcast summary. For more information on this topic, please listen to our full broadcast.
We recently read this cover story in Barron’s magazine, and we want to pass it on to you, our readers, as well:
“In his State of the Union speech last Tuesday, President Obama concluded that “the State of our Union is stronger.” The big question is: stronger than what?
Federal debt is a record $12.2 trillion, or 76% of the nation’s annual output of goods and services. While that’s still well below Greece’s 153%, we’re headed steadily in the wrong direction.
According to estimates by the Congressional Budget Office, adjusted by Barron’s to account for recent tax increases and other factors, if the U.S. doesn’t raise taxes further and cut spending dramatically, the national debt could easily reach 153% of economic output by 2035.
These are not just numbers. If the U.S. national debt continues ballooning, we can be sure of a deep, long-lasting recession — very likely a depression — sometime in the next two to three decades. The unemployment rate could easily surge to 20%.”
If you’d like to find out more about how we can help you and your money face upcoming challenges, act now by listening to the Monday Morning Market Outlook podcast, and then by giving us a call at 800-391-1118.
Contrary to popular opinion, setting goals and achieving them is relatively easy. However, there are two ground rules that people often miss, and then wonder why they don’t have more success. The rules are these: make exact, attainable goals, and write your goals down. Here are a few examples of the goals we encourage investors to make:
Income investors: exact amount of income you want to make this year from your investments
Growth investors: set growth target and decide what percentage of return you are aiming for
Add to retirement accounts through saving
Pay down debt
Increase non-retirement savings
Whan you have exact, written goals, it’s much easier to implement plans to make those goals a reality in your portfolio. If you want an 8% return on your investment, you need to think through what you are currently doing to accomplish that, and what you need to change this year.
This is the key to a good financial plan: calculate your net worth and set good goals. This is the time to do it, too, as January is the month that we are open to change and new ideas, and we want to set the right habits in place in the beginning of the year.
Also, don’t forget to listen to recent teleconference for some of our latest investment advice for achieving your goals, and if you have questions about your specific financial plan or portfolio, please call us at 800-391-1118 or email askdoug(at)dougfabian(dot)com.
Obviously, the fiscal cliff deal was a bit complicated and will have to be revisited (there will be more debt ceiling talks in Washington by March 1, 2013) but so far, these are the highlights for investors:
Income tax rates go up on individuals earning more than $400,000, or couples making more than $450,000
Estate taxes at 40%, first $5 million exempt for individual, and $10 million for family estates
Capital gains and dividends only change for individuals earning more than $400,000, or couples making more than $450,000
Social security payroll tax cut went away (we think this is a good thing, despite it being a tax increase, since Social Security has to be paid for)
No spending cuts in this deal, and it looks like those spending negotiations are delayed until March 1, 2013. This means there will be another battle in Washington in the near future.
Unfortunately, despite a favorable reaction in the financial markets, we still have out-of-control spending on the federal level, and it seems that politicians are unable to handle these issues in a positive way. Right now, the U.S. is borrowing 40 cents of every dollar we spend, which is obviously unsustainable, and the biggest risk of 2013.
What do you want to hear? We have received 20 or so emails so far, and we would love to get more. We want to improve, to be helpful to you and your portfolio, and to answer your needs through our podcast and blog. If you have questions, comments or suggestions, please send them to askdoug(at)dougfabian(dot)com, and let us know what you think!
We also wanted to highlight some of the feedback we’ve already gotten. One thing that we keep hearing is this:
People want to hear more about ETFs. It seems obvious that our readers and listeners want us to talk about exchange traded funds, explain what they are and how they work, and so we will endeavor to do a better job of that as we continue in our podcast and blog efforts. We will also continue to share watch lists and advice, but, despite the requests, we are not going to give specific buy and sell lists here on the blog or the podcast, as that would not be fair to our paid subscribers. However, if you’d like to sign up for one of our paid services, check our newsletters out here, or give our offices a call and talk to one of our advisers at 888-300-3684
Another concern we heard a lot of was this:
Many people feel that we have been too political on the blog and podcast. We’d like to explain why – because politics affects your investments. We think that the level of deficit spending in Washington is worrisome, and that it is the fault of both political parties. We think it’s obvious that government spending and entitlement spending are out of control, and that politicians in general have not been honest with the American people.
For every dollar that we spend at the federal level, we are borrowing 46 cents of that dollar, which is a dangerous path that could easily be the end of our country as we know it. As a nation, we need to get our act together and our financial house in order. Unfortunately, that’s just a reality of the times we live in – we know it’s not always fun to talk about, but we will do our best to give nonpartisan, common sense analysis, and we’ll continue to talk about it, because it will impact your financial life.
Again, please send us your thoughts, comments, questions and suggestions to askdoug(at)dougfabian(dot)com. We are looking forward to hearing from you and continuing to improve our blog and podcast.
This is a podcast summary. For more complete details, listen to our full podcast here, and don’t forget to pass this blog on to other friends and investors who might benefit from our perspective. Plus, if you haven’t already, please take some time this week to check out our recent teleseminar for in-depth information on post-election investing and our outlook on the markets.
President Obama has a big job ahead of him in this second term. Most of these challenges are fiscal and economic in nature, so we want to comment for our listeners and readers. Some of the pressing issues we see ahead for him (and our other leaders and elected officials) are:
Deficit
Debt
Taxes
U.S. Dollar (inflation or deflation)
Unfunded public employee benefits
Entitlements
International unrest
European debt crisis
Of course, we will be watching these items and more as we move forward into the next four years – and we will be here on the blog and podcast every week, giving analysis on these concerns and anything else affecting your capital and investment potential.
This is a podcast summary. For more complete details, listen to our full podcast here, and don’t forget to pass this blog on to other friends and investors who might benefit from our perspective. Plus, if you haven’t already, please take some time this week to check out our recent teleseminar for in-depth information on post-election investing and our outlook on the markets.
Because there’s a seemingly infinite amount of opinions and speculation in the news about the fiscal cliff, the future political and fiscal implications of current decisions and your money – its easy to get quickly panicked or worried. However, we believe that there is no reason to speculate about what we don’t know. If you’ve been listening to our podcasts and reading this blog, your portfolio is probably in great shape for whatever comes. We know that as we learn more, we’ll also get to see more investment opportunities on the horizon, which is exciting.
Our current certainties are:
Obamacare is not going away, and this will mean higher taxes and more regulation for businesses
These are just a couple of the things we know for sure, but it’s enough to keep ourselves educated and prepared, no matter what happens. It’s important that we don’t focus on uncertainty and fear, but rather, focus on what you know and work from there. As we’ve been saying for months – know your risk, your portfolio and your plans so that you can be prepared for any storms to come.
(This is a podcast summary. For more complete details, listen to our full podcast here, and don’t forget to pass this blog on to other friends and investors who might benefit from our perspective.)
The U.S. stock market is still being supported by the idea that the Federal Reserve won’t allow for any significant corrections or falls. Since the implementation of QE3 there has been little change in the market, but the real test will be how the stock market holds up in the face of the third quarter earnings report and the slowing economy.
The International Monetary Fund has cut its global forecast for every country in light of the global slowdown. This comes on the heels of a decent third quarter showing for the stock markets worldwide, including Europe. We think the current trend: printing money and continuing to borrow in order to prop up the markets, is a risky move for long-term growth.
So the question is, where in the world is there a place to grow your money? There are three areas we like for investments going into the next year. These are emerging markets, energy and agriculture. In regards to the vast category of emerging markets we are looking in particular at Asia and China. China is in a pretty good spot since in addition to already experiencing a bear market they don’t have the debt and deficit load that Europe and the United States have. This gives them the ability to borrow and invest to create growth. Check out our podcast to learn more about what is going on in China.
Right now on our website you can download the third quarter Exchange Trade Funds report, located in the special reports section. This has comprehensive coverage of all 1200 ETFs including the three areas discussed before that are high on our radar, and we encourage you to print that out. As always please call 800-391-1118 or email askdoug(at)dougfabian(dot)com with any questions.
