A Letter from
Phil
05.17.2010 – Signs of a Rebound
Since my last letter of 2/5/10, economic indicators are exceeding estimates of our bearish prognosticators and our Federal Reserve.
In the past six months retail sales are up at an 11.7% annual rate, new orders at a 12.4% rate and housing starts up at a 14% rate.
And with this kind of growth, the labor market has turned the corner. The economy added 290,000 new jobs during the month of April.
And the previous two months’ totals were revised higher. And, corporations are blowing away earnings estimates.
As I mentioned three months ago, data like this will make the Federal Reserve’s zero percent interest rates less and less appropriate.
It is time to prepare portfolios for higher rates. And it is better to be early rather than late. Inflation has a long fuse.
Mutual fund investors continue to shun equities in favor of bond funds. Bonds lose value in a rising rate environment. This will not end well those
purchasing bonds at the wrong time in the business cycle. This again, is a time for contrarian investing, a key component of a successful investment strategy.
I reference my 2-5-2010 letter again by saying you can protect yourself against rising rates by laddering certificates of deposit which are FDIC insured.
Investing money is a big decision and one needs to be extremely careful with this process. If you feel you are well equipped to make the decision of
investing your money yourself go ahead with it. In case you are not well versed with the stock markets, changing scenario and other investment options
it is advisable to take expert guidance to avoid an unpleasant situation.
If you feel there may be anyway that I may be able to help you or a family member? Please do not hesitate to call me.
Sincerely,
Phil Colby
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03.09.2011
