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 Sleep Well Investing: My Report From New Orleans
(Posted Nov 17)
Yesterday, I moderated a panel discussion with Steve Forbes and Steve Moore of the Wall Street Journal. Both gentlemen said that they are quite fearful of an Obama administration when it comes to giving more power to the unions and raising taxes. We still don't know how deep this recession is going to be, and hence the continued decline on Wall Street.
 The fundamental problem is that our global financial system is built on a fragile house of cards. I made a big point of this in my book, "Investing in One Lesson" (Regnery, 2007, available on Amazon.com). Last month, I was on CNBC’s Kudlow & Co. several times. Larry likes to be optimistic, and he compared the opportunities in today’s beaten-down market to Jesus’ parable of the mustard seed. First, keep an eye on the credit crunch and the desperate attempts by central banks and the Treasury to restore the financial system back to normalcy. A number of expert contrarians called the stock market panic of 2008. Bert Dohmen, editor of the Wellington Letter, warned of a meltdown at this year’s FreedomFest, and even wrote a book about it. We only have two individual stocks in our portfolio right now, both are medical device companies. Interest rates on T-bills, T-bonds, and other "safe" government securities have fallen to their lowest level in decades, and the Fed cut the target rate to 1.5% last month, another sign of panic by the Fed. How long does it take your portfolio to recover after a devastating bear market? It took a little more than a year to get even after the stock market crash of October 19, 1987… more than four years to get back your money after the treacherous 2000-03 bear market… and more than five years after the 1973-74 debacle. Treasury Secretary Hank Paulson expects "a few more months" of turbulence as the economy responds to the bailout and massive injections of liquidity. Inflation, recession and tight credit conditions are our greatest fears, both here and abroad. |
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