Invest Intelligence When It Realy Matters
U.S. Economic Analysis from the July 2010 Newsletter
This article was taken from a section of the July 2010 AVA Investment Analytics newsletter. While more than five months have passed since the release of this report, it has been published to demonstrate that real forecasts and accurate insight does not change from day-to-day, week-to-week, or month-to-month.
The Federal Reserve
A few weeks ago the Federal Reserve stated they now feel the so-called “recovery” is occurring at a more rapid rate. As a result of this “progress,” they raised their 2010 GDP estimates. Despite this accelerated “recovery,” they plan to leave rates essentially unchanged most likely through most of 2010. Thus, their statement and their actions contradict each other.
Reality is much different than what you hear from Washington and the media. Unemployment is still terrible and the problems in Europe will surely affect the U.S. economy as well as multinational corporations. Investors are just beginning to realize risks that remain.
In response, the stock market has sold off by about 14% after topping 11,300 in March of this year. Investors who have followed my guidance have been insulated from these losses. In fact, subscribers to this newsletter rode the market up from the March 2009 lows all the way up to the top and were urged to exit a few months ago.
In past issues, I have tried to demonstrate that the global bubble has reflated. There is simply too much currency in circulation; not just the dollar, but all currencies. This further highlights evidence of a global bubble, which not only failed to correct adequately, but has now been reflated. What this means is that the risks have been elevated back to near pre-crisis levels. The main risks are credit, liquidity and sovereign debt.
Reflation of the global bubble combined with increasing risks are reasons to focus on risk management. Unlike mutual funds, individual investors are not required to remain in the stock market at all times. Thus, they have a huge advantage. Make sure you utilize it!
Throughout this treacherous period, your biggest enemy is likely to be your own greed, impatience, and panic. If you succumb to these emotions, you stand to lose much of what you have.
As a result of this vulnerable predicament, at any time, the global markets could implode, although I would expect such an event to occur over several months, and would be catalyzed by a string of economic problems from around the globe.