Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
May 2013 Update Economic Update: There is much recent hullabaloo over the famous Rogoff and Reinhart finding that high levels of govt debt severely impact a country’s growth. I’ve cited their work before and I will stick to their findings: at some point when govt debt is greater than 90% of total country GDP, private sector growth will slow dramatically. This, of course, impedes any country’s effort to grow their way out of the debt hole. Per their research there eventually comes the BANG moment where rates soar and the govt is then bankrupt. Our economy was decent in first Quarter—just a slow plodding along, but well below prior recovery rates. The good news is that the private sector is growing enough to offset the reductions that are starting to ripple through all the public sector. We’ll need this private/public dance for a while since the private sector is the golden goose for taxes to the public sector. Market Update: After a brief sell-off stocks have come right back to their 5 yr highs. My indicators still point to some correction in the near future: insiders are selling too much, advisors are way too bullish, and 5 years is a long time for any market to be climbing. But all the chart gazers will tell you we are onward and upward since most indices have gone to new highs. I’m happy to have an excess of bonds and cash just in case the markets want to correct. Mutual Funds and Asset Allocation: The big winner this year, and for the past several years, is Biotech stocks! They are up about 25% this year and are proving to be the source of most new drugs coming to market. With this latest plunge in gold prices, the biggest loser is gold mining stocks, down some 35% for the year, and putting that group with no gains over the last five years--an interesting outcome in a world full of Central Bank money printing. The short answer is that we are facing tremendous DEFLATION from all our debts and the money printing and zero interest rates cannot seem to help at all. Bond funds have recovered a bit, showing gains of about 1.5% YTD, which would annualize to a pleasant 4-5% return for the year. As always, I thank you for your business and your support!! John