What has become of the American nation, conceived with the notion of liberty, opportunity, and justice for all?  We have descended into the clutches of corporate and other special interest groups and are seemingly becoming a second rate world power.  Our government does not work any more, or perhaps more properly, does not work for the American people. Legislators and presidents all to often do not work for the benefit of their constituents, but rather to perpetuate their own power and agenda.  The present attempt by a left wing president to gain governmental control of the nation’s health care system (a very substantial portion of the economy), while opposed by a substantial majority of the American people is but one of a long list of examples. If our nation is to survive with any reasonable standard of living and liberty, this must change and soon.

Traditional US equity markets have just completed the worst decade in their history.  The Standard and Poors composite ended 2009 more than 20% below where it was ten years prior and the NASDAQ was down more than 40% from it’s level ten years prior.  There are those who would attribute this poor performance to a decline in our domestic manufacturing base.  For example, ten years ago, the United States supplied some 14% of the world’s steel, today it’s 7%.  When asked about this, former Federal Reserve Chairman Alan Greenspan’s answer was that, “we’ll find another way to create profits.”  Perhaps we can all trade equities and create derivatives, or perhaps we can enter the “service sector”?  No, I guess not, we are outsourcing all of that to India.   

While there is a glimmer of hope in recent political developments, we have seen this many times previously and have been disappointed.  Some are hopeful because of the alleged emergence of so called “green shoots”; we do not share that optimism.  We are of the opinion that the investment landscape has changed and shall remain so for the next many years, if not for the rest of our reader’s economic lifetime.

The mantra of “buy and hold” equities is unlikely to produce profits in the foreseeable future.  Substantially higher interest rates are nearly a certainty in our view, however, we are not certain this rise in rates will be accompanied by inflation, which many others are forecasting.  It is possible, in our opinion, that the coming rise in rates will be almost entirely risk based. The manner in which all of  us manage our investment portfolios will change significantly, if not dramatically. Please call us for a complimentary consultation concerning your situation.