Tuesday, JUNE 29, 2010

Looks like the market will drop 250 points today!
… a continuation of my last news-letter (June 4th) "Road is getting BUMPIER"

At the recent G 20 Summit in Toronto, most of the member countries were advocating “austerity & fiscal restraint”. Our President, however, was in the minority…stressing that we (the G20 Countries) need to continue stimulus.

Here’s the issue:
a) European countries are so closely linked to the near-collapse of Greece, that they have been “scared straight”. THEY now realize that they can’t continue to spend money they don’t have.

b) Even though we have California to look at as a poster child … our government is still willing to SPEND to prop-up our economy…because consumers AREN’T spending. (We American Consumers have been “scared straight” too).

c) Without continued stimulus…the economy is in jeopardy of stalling again. That’s a real problem … NO STIMULUS=NO GROWTH … OR MORE LIKELY… NO STIMULUS=RECESSION.

Something eventually has to give! It just makes sense.

Either we deal with the problem now, or we continue to “throw money at the problem” (continuing stimulus)… that weakens our dollar, and future hopes for recovery. No one (including a government as big as the US) can “kick a problem down the road” forever.

From a Financial Planning point of view… here’s what we investors should be looking at.

1) We must seek opportunities around the world. We do this by using Mutual Fund Managers who comb the entire globe for good investments ... instead of focusing only on the US market. This goes for Stocks and Bonds. We want to avoid countries with financial problems (Greece, Portugal, Spain, Italy, the UK, Japan, and the US.)

2) We should "play defense"(install “shock absorbers”) and plan for the bumps so we can make up some ground (compared to most) as we go down this rough road. Some defensive ideas include:
 Gold
 Agriculture
 Short-duration Foreign Bonds
 Contrarian type funds
 Yield producing equities

3) In addition, we need to stay broadly diversified with a bias toward slightly less equity and slightly more alternative assets.

4) We should try to lessen taxes. (Cutting your tax bill is just like making more on your investment!) In a difficult investment climate, saving tax dollars may be you best immediate investment.

The Road is going to continue to be bumpy… we need strong “shock absorbers”.

Please feel free to pass this along to others who may be interested in its content.
As always, I look forward to your comments and questions.

The opinions expressed in this news letter are those of TBROOKS Financial Services and are current only through June 29, 2010. These views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed. Past performance is no guarantee of future results.