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Akaralph
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Semi-retired consultant residing in beautiful northeast Georgia. Over 40 years of responsible experience in planning, finances and investment management. Primary focus is on portfolio development for retired (or nearly retired) individuals who do not possess great wealth. The Protected Principal... More
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Protected Principal Retirement Investing
  • 2010 - More Of The Same; Or Less 0 comments
    Jan 9, 2010 10:03 AM
    Wow! 65% percent gain in the market averages since March 2009. Let's not get carried away by this - it probably isn't going to happen in 2010.

    Spending, increased taxes, more governmental regulation and intervention, a weaker dollar, continuing high unemployment, an inflationary scenario, potential interest rate hikes, increased risk of terrorism and a general lack of concern for the American people being demonstrated by our elected officials somehow doesn't equate to a healthy return in the stock market.

    In my opinion, the first quarter of 2010 could be a continuation of the 2009 market advance, but at some point all of the above will catch up with this advance. While I am not going out on a limb to make a prediction for the market averages for 12/31/2010, I will make the following suppositions:

    1. Terrorism could be the dominant scenario for 2010. The present administration continues to downplay the country's security needs and with each day Israel moves closer to acting against Irans' increasing nuclear capabilities.

    2. The administration's rush to complete implementation of their "tax and spend" agenda before the mid-term elections could put the country in a non-recoverable mode.

    3. Printing money on a 24/7 basis will most certainly result in significant inflation.

    4. Interest rates cannot (and should not) remain at current levels. While rate hikes to the 3% or 4% level would be viewed as negative by the markets; these are reasonable and will certainly stimulate savings. It is when the Fed "over corrects" that we will be in trouble.

    5. Subtle, and not so subtle tax increases will decrease disposable income for the middle class as well as for the rich.

    6. Aside from a technical rally, the US dollar is in an almost terminal downtrend.

    7. The housing market does not show any signs of a quick recovery, particularly when coupled with a "real" unemployment rate in excess of 17%.

    The list can go on, but can anyone (except for elected officials) continue to put a positive spin on the global situation?

    In my opinion, we as investors must act in the next few months to insure our financial survival. Axel Merk's new book "Sustainable Wealth" is a recommended read for anyone interested in maintaining a viable lifestyle in the event that all of the above come to fruition.

    From my personal standpoint I am re-evaluating my portfolio and selling those stocks and closed-end funds that do not match the overall economic scenario that I point out above.

    At this time I am holding those pipeline MLP's that transport oil and natural gas across the country. These would include; EPD, NGLS and PVR (with the added benefit of coal). I also like CQP and WHX for their continued stream of high distributions.

    Am moving out of high yield bond closed end funds in favor of floating rate debt funds.

    Looking for an opportunity to increase somewhat my position in GGN, as I do not see gold correcting much more and it doesn't hurt to maintain a small position as an "insurance policy".

    My one new foray for 2010 is into currencies. I do not see a bright future for the dollar, so I am looking at the following currency funds: MERKX, JGT and GCF.

    Finally, I plan on moving a little more money into emerging markets and Australia/New Zealand funds as the opportunity presents itself. Presently watching EMF and IAF, among others.

    Aside from added caution in the investment arena, I urge folks to watch their spending and debt habits, continue saving, do everything in your power to become indispensible to your employers, and to focus on what is happening around you. Oh, and never forget to treasure family and friends.

    Disclosure: I presently have positions in EPD, NGLS, PVR, CQP, WHX and GGN.



    Disclosure: Long: EPD, NGLS, PVR, CQP, WHX and GGN
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