The last newsletter talked about having a snowstorm in the stock market. The snowstorm continued this past week but with all stock market indexes fallling further even with positive news in the growth of the economy with a 5.7% annual increase in GDP. Maybe, I should stop writing about snow as Hickory got 8 inches of snow this weekend. More snow related facts are at the bottom.
While January started off well in the stock market, the last few weeks have been very frustrating. For the month, all stock market indexes have gone down. What does this mean for the rest of the year, should we buy, sell, or hold onto stocks and stock mutual funds? Some journalists are writing that the January results are an indicator for the rest of the year. History would suggest otherwise as shown below.
Below is the historical data that I copied from a Fidelity website.
In one of the most dramatic comebacks in U.S. stock market history, the S&P 500® Index rallied a remarkable 65% from its March 9 low to December 31, 2009. The speed and magnitude of this snapback caught many by surprise. Now the big question is: Does this rally have legs?
History is not always prologue, of course. But if it does repeat itself, the market may have room for additional gains in 2010, though likely at a slower pace than in 2009. Compared with 13 bear market recoveries since 1929, the 2009 stock market rebound is one of the most robust ever. The S&P's 65% rise from March 9 to December 31, 2009, is more than a third higher than the average 46% rebound in the first year of new bull markets. The 2009 rally even beats the average two-year return of 57% in prior bull market recoveries.
Have stocks bounced too far too fast?
The S&P 500 Index is still 29% below its level prior to the start of the bear market in October 2007, which is significantly lower than the -14% average (-8% median) return of all prior bear-bull cycles (through first year of each new bull market). Of course, the recent stock market meltdown was the third worse of similar magnitude since the 1929-2009 time period. If you compare where the market is today to where it was a year after downturns of comparable severity, we're in the same ballpark. After the 1937-1942 downturn, the S&P was still 39% below its precrash high, and a year after the 2000-2002 downturn, the S&P was down 32% from its previous high. A year after the 1973-1974 bear market, the S&P was down 29% from its prior high. That's almost exactly where we are today.
What about tomorrow?
Well, no one can say for sure whether the stock market rebound will continue through 2010, and past performance is no guarantee of future results. But historically, stocks have continued to rise during the second year of a bull market, and have recouped most of their bear market losses by the end of the second year. On average, the market was down 5% from its precrash high two years into a new bull market. After severe bear markets, the full-cycle recovery took longer. For example, two years after the 1973-74 bear market, the S&P was still 13% below its precrash high. After the 2000-2002 drop, the market was down 26%. But in 12 out of 13 bear-bull market cycles, gains continued during the second year of the recovery, just at a slower pace.
Investment implications
Like a rubber band that's been stretched and let go, the biggest gains after bear markets have tended to come in the early snapback phase. But history shows that the stock market typically rallied through the second year of the recovery, albeit more gradually than during the first. Investors should note that the market's current bear-bull cycle is roughly in line with prior ones in which stocks generally continued to advance.
My bottom line: I am buying and holding stocks and stock mutual funds.
Snow facts:
Every snowflake has its own unique shape and is different than all other snowflakes. All snowflakes have six sides.
Snowflakes aren't always white. Years ago, when coal was used in factories and homes, snow was often gray. Why? Because the coal dust entered the air and was absorbed by the clouds. In Prince Edward Island, Canada, where the soil is red clay, snowflakes often look pink. Why? Because red dust from the soil is blown into the air and absorbed by the clouds.
The largest snowflakes ever recorded fell in the state of Montana in the United States of America. The snowflakes were 15 inches in diameter.
The snow capital of the United States is Stampede Pass in Washington State. Each year, the average snowfall is 430 inches.
The average snowflake falls at a speed of 3.1 miles per hour.
A blizzard occurs when you can't see for 1/4 mile. The winds are always 35 miles an hour or more. The storm must last at least 3 hours to be classed as a blizzard. If any of these conditions are less, it is only a snowstorm.
Sunday, January 31, 2010
Friday, January 22, 2010
Snowstorm in Spring
WOW what a snowstorm we had in the stock market this week, with indexes dropping about 5% in a short time. During the week when spring was in the air, a severe snowstorm blew in right after former Senator Edward Kennedy Senate seat was won by a Republican. Perhaps he did turn over in his grave. This snowstorm caught the stock market forecaster, Cramer, by surprise as he predicted sunny skies if Mr. Brown won. It appears that predicting the stock market is even more difficult than the weather.
This snowstorm was so large that people wondered if spring had really arrived. It was so bad people might even question whether winter had come back. A snowstorm during spring typically does not last.
Is it spring? Yes it is if you look at the recent reports of corporate earnings as most companies are beating expectations. Also, the index of leading economic indicators rose 1.1% during December its ninth straight month of gains since March 2009. The data suggests that spring is alive and well, in fact it should be a pretty normal one.
So what happened? The traders came in droves as a wave of fear swept in like an Alberta Clipper. It seemed like a speech from President Obama resulted in a snowstorm. It is true that weather and people are not always rational.
The good news is that commodity prices dropped so that the price of gas will be going down in the short term and that long term interest rates also fell. This helps everyone at the gas pump and people who are buying mortgages.
The good news is that spring snowstorms do not last long so relax and wait for warmer weather.
SNOW FACTS
Based on National Climatic Data Center records, New York state is home to the snowiest cities in the United States: Syracuse averages 115 inches of snow per year, and Rochester averages 93 inches per year. However, several less populated areas around the country receive much more snow. For instance, Mount Washington, New Hampshire, has an average annual snowfall of 260 inches, and Valdez, Alaska, averages 326 inches annually.
Buffalo, New York, is a close runner-up in terms of U.S. large cities with the most snow. A 39-inch snowfall in 24 hours in early December 1995 cost the city nearly $5 million for snow removal.
Almost 187 inches of snow fell in seven days on Thompson Pass, Alaska, in February, 1953, according to the National Snowfall and Snow Depth Extremes Table provided by the National Climatic Data Center.
Each year an average of 105 snow-producing storms affect the continental United States. A typical storm will have a snow-producing lifetime of two to five days and will bring snow to portions of several states.
The greatest snowfall officially reported at the Phoenix, Arizona, National Weather Service Office was one inch. That occurred twice. The first time was January 20, 1933. It happened again four years later on the same date.
The commonly used ten-to-one ratio of snowfall to water content is a myth for much of the United States. This ratio varies from as low as 100-to-one to as high as about three-to-one depending on the meteorological conditions associated with the snowfall.
This snowstorm was so large that people wondered if spring had really arrived. It was so bad people might even question whether winter had come back. A snowstorm during spring typically does not last.
Is it spring? Yes it is if you look at the recent reports of corporate earnings as most companies are beating expectations. Also, the index of leading economic indicators rose 1.1% during December its ninth straight month of gains since March 2009. The data suggests that spring is alive and well, in fact it should be a pretty normal one.
So what happened? The traders came in droves as a wave of fear swept in like an Alberta Clipper. It seemed like a speech from President Obama resulted in a snowstorm. It is true that weather and people are not always rational.
The good news is that commodity prices dropped so that the price of gas will be going down in the short term and that long term interest rates also fell. This helps everyone at the gas pump and people who are buying mortgages.
The good news is that spring snowstorms do not last long so relax and wait for warmer weather.
SNOW FACTS
Based on National Climatic Data Center records, New York state is home to the snowiest cities in the United States: Syracuse averages 115 inches of snow per year, and Rochester averages 93 inches per year. However, several less populated areas around the country receive much more snow. For instance, Mount Washington, New Hampshire, has an average annual snowfall of 260 inches, and Valdez, Alaska, averages 326 inches annually.
Buffalo, New York, is a close runner-up in terms of U.S. large cities with the most snow. A 39-inch snowfall in 24 hours in early December 1995 cost the city nearly $5 million for snow removal.
Almost 187 inches of snow fell in seven days on Thompson Pass, Alaska, in February, 1953, according to the National Snowfall and Snow Depth Extremes Table provided by the National Climatic Data Center.
Each year an average of 105 snow-producing storms affect the continental United States. A typical storm will have a snow-producing lifetime of two to five days and will bring snow to portions of several states.
The greatest snowfall officially reported at the Phoenix, Arizona, National Weather Service Office was one inch. That occurred twice. The first time was January 20, 1933. It happened again four years later on the same date.
The commonly used ten-to-one ratio of snowfall to water content is a myth for much of the United States. This ratio varies from as low as 100-to-one to as high as about three-to-one depending on the meteorological conditions associated with the snowfall.
Sunday, January 17, 2010
Investing and the Weather Spring
I hope you are enjoying the warmer winter weather. Having temperature above freezing sure does lift spirits. This newsletter is the first one in a series comparing spring time weather and spring time in the economic business cycle. A normal economic business cycle lasts between 5-8 years.
Spring is defined as a 3 month period on the calendar while actual springtime weather has a lot of variability. Spring time weather is when temperatures warm, plants return to life, animals reappear, etc. It is common to have frost and snow even once spring time weather has started. In fact, some major snowfalls do occur during spring and while it is an inconvenience it is still spring time.
Spring in the economic business cycle starts when the Federal Reserve states that the economy has stabilized and is starting to grow again. Interest rates are relatively low as the Federal Reserve is trying to get the economy at a 3% growth rate, their stated policy. Employment will start to improve as companies start to grow again. Interest rates will stay low for as long as it takes to get economic growth that creates jobs. It is a period of economic transition.
The economic spring does not have a defined time period and is more on the magnitude of a year instead of 3 months and it tends to last longer than winter. Stock markets rise around the globe in a jagged fashion just like the weather. In fact it is possible to have the stock market drop that gets people's attention just like a snow during spring.
The economic spring ends when the Federal Reserve states that the economy has returned to "normal" whatever they thing that the term means. Interest rates rise during spring as things improve.
Watching short term and long term interest rates is key in business cycle investing. Last week, I stated that because of jobs data long term interest rates would come down during the week and that the current bond funds should be maintained as we are early in the spring season. Indeed long term rates did come down during the week making this a good decision for now.
SPRING FACTS:
In the eastern United States, Spring weather travels northward at a rate of about 13 miles (20 km) per day.
The lifetime of a typical small cumulus cloud is 10 to 15 minutes.
A small, fluffy cumulus cloud may hold 100 to 1000 tons of liquid water.
More than just gentle showers: Under an average annual rainfall of 700 mm, the total impact energy of raindrops hitting the ground can be as much as 4000 tons of TNT.
God Bless you and your families. God Bless the people of Haiti and those who are working diligently in this situation.
Spring is defined as a 3 month period on the calendar while actual springtime weather has a lot of variability. Spring time weather is when temperatures warm, plants return to life, animals reappear, etc. It is common to have frost and snow even once spring time weather has started. In fact, some major snowfalls do occur during spring and while it is an inconvenience it is still spring time.
Spring in the economic business cycle starts when the Federal Reserve states that the economy has stabilized and is starting to grow again. Interest rates are relatively low as the Federal Reserve is trying to get the economy at a 3% growth rate, their stated policy. Employment will start to improve as companies start to grow again. Interest rates will stay low for as long as it takes to get economic growth that creates jobs. It is a period of economic transition.
The economic spring does not have a defined time period and is more on the magnitude of a year instead of 3 months and it tends to last longer than winter. Stock markets rise around the globe in a jagged fashion just like the weather. In fact it is possible to have the stock market drop that gets people's attention just like a snow during spring.
The economic spring ends when the Federal Reserve states that the economy has returned to "normal" whatever they thing that the term means. Interest rates rise during spring as things improve.
Watching short term and long term interest rates is key in business cycle investing. Last week, I stated that because of jobs data long term interest rates would come down during the week and that the current bond funds should be maintained as we are early in the spring season. Indeed long term rates did come down during the week making this a good decision for now.
SPRING FACTS:
In the eastern United States, Spring weather travels northward at a rate of about 13 miles (20 km) per day.
The lifetime of a typical small cumulus cloud is 10 to 15 minutes.
A small, fluffy cumulus cloud may hold 100 to 1000 tons of liquid water.
More than just gentle showers: Under an average annual rainfall of 700 mm, the total impact energy of raindrops hitting the ground can be as much as 4000 tons of TNT.
God Bless you and your families. God Bless the people of Haiti and those who are working diligently in this situation.
Saturday, January 9, 2010
Investing and the Weather
I hope you are all staying warm and safe during this very brutal cold weather. At the end, are some It's so cold jokes for your amusement.
This week was excellent for all of the accounts. It is good to see the year start so well.
The most important story of the past week, that has the biggest impact on investing decisions, was the job loss number for December. Instead of showing a job gain the result was a job loss. This is the most significant data because it guides the interest rate decision for the Federal Reserve, who will maintain the current low rates for awhile, and will put a ceiling on long-term interest rates for now. Because of this data, the current bond funds will be maintained for now.
Business Cycle Investing is like the weather in that both have 4 seasons and different actions are needed for each season. This brutal cold weather resembles the great recession that we have endured. We are investing like it is spring. Yes spring will arrive in a few months.
It's so cold that:
you light a candle and the flame freezes
your shadow freezes to the sidewalk
you have to break the smoke off your chimney
you have to open the fridge to heat the house
It was so cold the lawyers had their hands in their own pockets....
I'm shivering like a mobster in a tax office.
Stay warm and think of spring!!!!!
This week was excellent for all of the accounts. It is good to see the year start so well.
The most important story of the past week, that has the biggest impact on investing decisions, was the job loss number for December. Instead of showing a job gain the result was a job loss. This is the most significant data because it guides the interest rate decision for the Federal Reserve, who will maintain the current low rates for awhile, and will put a ceiling on long-term interest rates for now. Because of this data, the current bond funds will be maintained for now.
Business Cycle Investing is like the weather in that both have 4 seasons and different actions are needed for each season. This brutal cold weather resembles the great recession that we have endured. We are investing like it is spring. Yes spring will arrive in a few months.
It's so cold that:
you light a candle and the flame freezes
your shadow freezes to the sidewalk
you have to break the smoke off your chimney
you have to open the fridge to heat the house
It was so cold the lawyers had their hands in their own pockets....
I'm shivering like a mobster in a tax office.
Stay warm and think of spring!!!!!
Wednesday, January 6, 2010
2010 Retirement Benefit Information
2010 is far from typical. Because of a drop in the consumer price index, government payouts and tax incentives to save for retirement will generally stay the same. At the same time, out-of-pocket retiree health costs, especially for prescription drugs, will continue their steady climb. Here's a look at what will happen to retirement benefits this year.
No Social Security increase. Monthly Social Security checks for most beneficiaries will not increase in 2010. Retirement payouts are tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers, which fell between the third quarter of 2008 and the third quarter of 2009. Next year will be the first without a Social Security increase since cost-of-living adjustments went into effect in 1975. (There is a chance of a change, though; several bills to give retirees a raise are being considered by Congress.) The maximum amount of earnings subject to the Social Security tax will also remain the same at $106,800.
Higher Medicare Part B premiums for some. Most current Social Security recipients will continue to pay $96.40 each month for Medicare Part B medical insurance, the same amount as in 2009. But for new enrollees, Medicare Part B monthly premiums will be $110.50, a 15 percent increase from 2009 prices. Retirees with incomes greater than $85,000 ($170,000 for couples) also will pay higher premiums, ranging from $154.70 to $353.60 each month, depending on the income reported on their 2008 tax return.
Larger Medicare Part D premiums and out-of-pocket costs. The average monthly Part D premium will increase by 11 percent in 2010 if beneficiaries remain in their current plans, according to a recent analysis of 2010 plans by researchers at the Kaiser Family Foundation, Georgetown University, and the University of Chicago. About 61 percent of drug plans will charge a deductible in 2010, and 80 percent will have a coverage gap--or "doughnut hole"--during which beneficiaries must pay 100 percent of their drug costs, up from 45 percent and 75 percent respectively this year. "For those in a plan that increases its premium, people who have their Part D premiums deducted from their Social Security check could see a reduction in their Social Security payments beginning in January," says Tricia Neuman, director of the Medicare Policy Project at the Kaiser Family Foundation.
401(k) contribution caps stagnant. The contribution ceiling for 401(k)'s will stay the same next year. The maximum amount will remain $16,500. Those age 50 and older will be able to make catch-up contributions of an additional $5,500 next year, which is also unchanged from 2009. "There was speculation about whether that $16,500 would be reduced for 2010 because there was negative inflation in 2009, but the limits are not going down," says Mark Iwry, a senior treasury official. Workers with a retirement plan who earn less than $66,000 annually ($109,000 for couples) also can contribute up to $5,000 to a traditional or Roth IRA, and workers age 50 and over can contribute up to $6,000. The income limits don't apply to couples who don't have a retirement plan through their jobs.
Pension insurance limits stay the same. The federal government insures most private-sector pensions up to certain limits. The maximum amount that will be replaced by the government if your employer goes bankrupt in 2010 will be $54,000, which is unchanged from 2009. Insurance amounts are indexed to Social Security benefits, which will also remain the same in 2010, according to the Pension Benefit Guaranty Corp. As in previous years, the maximum insured pension is higher for workers who delay retirement and lower for those who retire early. Annual maximums are reduced for workers who elect survivor's benefits for a spouse.
401(k) matches return. There is some good news for retirement savers in 2010. Many employers that suspended their 401(k) match in 2008 or 2009 plan to resume it in 2010. Among Fidelity-administered 401(k) plans, 27 percent of employers that cut contributions to employee retirement accounts have already resumed the match or plan to reinstate it next year. Another survey, by the Profit Sharing/401(k) Council of America, found that almost half (47 percent) of companies that suspended their employee match are planning to restore it within the first quarter of 2010. Both studies found that large employers were especially likely to restart the match. Most employers (70 percent) that expect to reinstate their retirement account match are planning to pick up where they left off, according to a recent survey of large employers by consulting firm Watson Wyatt. Other firms surveyed will reintroduce the match at a lower level (13 percent) or will vary the amount of the match based on company profits (17 percent). Robyn Credico, Watson Wyatt's director of defined contribution consulting, says: "They will give you a match, but it will depend on how well the company has done."
No Social Security increase. Monthly Social Security checks for most beneficiaries will not increase in 2010. Retirement payouts are tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers, which fell between the third quarter of 2008 and the third quarter of 2009. Next year will be the first without a Social Security increase since cost-of-living adjustments went into effect in 1975. (There is a chance of a change, though; several bills to give retirees a raise are being considered by Congress.) The maximum amount of earnings subject to the Social Security tax will also remain the same at $106,800.
Higher Medicare Part B premiums for some. Most current Social Security recipients will continue to pay $96.40 each month for Medicare Part B medical insurance, the same amount as in 2009. But for new enrollees, Medicare Part B monthly premiums will be $110.50, a 15 percent increase from 2009 prices. Retirees with incomes greater than $85,000 ($170,000 for couples) also will pay higher premiums, ranging from $154.70 to $353.60 each month, depending on the income reported on their 2008 tax return.
Larger Medicare Part D premiums and out-of-pocket costs. The average monthly Part D premium will increase by 11 percent in 2010 if beneficiaries remain in their current plans, according to a recent analysis of 2010 plans by researchers at the Kaiser Family Foundation, Georgetown University, and the University of Chicago. About 61 percent of drug plans will charge a deductible in 2010, and 80 percent will have a coverage gap--or "doughnut hole"--during which beneficiaries must pay 100 percent of their drug costs, up from 45 percent and 75 percent respectively this year. "For those in a plan that increases its premium, people who have their Part D premiums deducted from their Social Security check could see a reduction in their Social Security payments beginning in January," says Tricia Neuman, director of the Medicare Policy Project at the Kaiser Family Foundation.
401(k) contribution caps stagnant. The contribution ceiling for 401(k)'s will stay the same next year. The maximum amount will remain $16,500. Those age 50 and older will be able to make catch-up contributions of an additional $5,500 next year, which is also unchanged from 2009. "There was speculation about whether that $16,500 would be reduced for 2010 because there was negative inflation in 2009, but the limits are not going down," says Mark Iwry, a senior treasury official. Workers with a retirement plan who earn less than $66,000 annually ($109,000 for couples) also can contribute up to $5,000 to a traditional or Roth IRA, and workers age 50 and over can contribute up to $6,000. The income limits don't apply to couples who don't have a retirement plan through their jobs.
Pension insurance limits stay the same. The federal government insures most private-sector pensions up to certain limits. The maximum amount that will be replaced by the government if your employer goes bankrupt in 2010 will be $54,000, which is unchanged from 2009. Insurance amounts are indexed to Social Security benefits, which will also remain the same in 2010, according to the Pension Benefit Guaranty Corp. As in previous years, the maximum insured pension is higher for workers who delay retirement and lower for those who retire early. Annual maximums are reduced for workers who elect survivor's benefits for a spouse.
401(k) matches return. There is some good news for retirement savers in 2010. Many employers that suspended their 401(k) match in 2008 or 2009 plan to resume it in 2010. Among Fidelity-administered 401(k) plans, 27 percent of employers that cut contributions to employee retirement accounts have already resumed the match or plan to reinstate it next year. Another survey, by the Profit Sharing/401(k) Council of America, found that almost half (47 percent) of companies that suspended their employee match are planning to restore it within the first quarter of 2010. Both studies found that large employers were especially likely to restart the match. Most employers (70 percent) that expect to reinstate their retirement account match are planning to pick up where they left off, according to a recent survey of large employers by consulting firm Watson Wyatt. Other firms surveyed will reintroduce the match at a lower level (13 percent) or will vary the amount of the match based on company profits (17 percent). Robyn Credico, Watson Wyatt's director of defined contribution consulting, says: "They will give you a match, but it will depend on how well the company has done."
Saturday, January 2, 2010
2009 and 2010
Happy New Year, may you have a very healthy and prosperous 2010. This newsletter reviews 2009, looks forward to 2010, and gives an update on WWEE.
2009 REVIEW
A family member asked me during a Christmas party in 2008 what should be done with their investments for 2009? My response was this was the greatest buying opportunity for stock in our lifetime. While this looks like a good statement now, this family member may have thought that I was crazy about March when we reached the lows for the year.
2009 was the last year in the 2000-2009 decade. The biggest news was that during this decade the stock market indexes went down. In the history of the S&P 500 index, it has always been higher during any given any decade. So what does this mean?
The idea of buy and hold stocks and everything will be OK in the future is now a very bad strategy. You need to know when to hold-em and when to fold-em to borrow a line from a Kenny Rogers song "The Gambler". You need a strategy that indicates what to own, when to own it, and when to sell. The strategy that I use is Business Cycle Investing which follows the actions of the Federal Reserve and the growth rate of the economy rather than some expert in the news, except for Warren Buffet.
The investment categories that did the best during this decade were commodities and international stocks. Commodities rose because of worldwide growth in demand due to growth in emerging and developing countries. This trend should continue for the next decade. During the decade, mutual funds that had exposure to commodities gave the best returns.
2010 AND BEYOND
While I am not smart enough to predict the future, as many experts believe that they have this divine power, it is easy to see major trends. So what do I see for 2010?
2010 should give higher commodity prices, higher interest rates, and higher stock market prices. The mutual funds that invest in the stock market are still well positioned. My biggest concern is the interest rate increase and may make some moves in mutual funds that invest in bonds. In the past, stocks have moved esentially sideways for long time periods followed by a significant move higher. While it is impossible to predict the timing of this move, it will happen.
UPDATE ON WWEE
We are in the midst of a Worldwide Wireless E-commerce Explosion, WWEE. The signs are all around us, this is what I have seen lately:
* Smart phones are moving more deeply into the consumer market as phone makers are forming alliances to move forward. The latest entrant is Droid from Motorola and the alliance is with Google, 2 powerful companies.
* 3G advertisements between AT&T and Verizon shows that data coverage is now very important to consumers.
* Introduction of MiFi technology, where up to 4 data devices such as computers and smart phones can connect to a single node. You have seen the commercial of people in a car going down a road connected to a node in the car with this node communicating to a satellite. This is important to consumers as it lowers cost for internet connections.
* Adoption of MiFi by Ford as new Ford vehicles will offer this option.
WWEE is moving forward, make sure not to miss it.
2009 REVIEW
A family member asked me during a Christmas party in 2008 what should be done with their investments for 2009? My response was this was the greatest buying opportunity for stock in our lifetime. While this looks like a good statement now, this family member may have thought that I was crazy about March when we reached the lows for the year.
2009 was the last year in the 2000-2009 decade. The biggest news was that during this decade the stock market indexes went down. In the history of the S&P 500 index, it has always been higher during any given any decade. So what does this mean?
The idea of buy and hold stocks and everything will be OK in the future is now a very bad strategy. You need to know when to hold-em and when to fold-em to borrow a line from a Kenny Rogers song "The Gambler". You need a strategy that indicates what to own, when to own it, and when to sell. The strategy that I use is Business Cycle Investing which follows the actions of the Federal Reserve and the growth rate of the economy rather than some expert in the news, except for Warren Buffet.
The investment categories that did the best during this decade were commodities and international stocks. Commodities rose because of worldwide growth in demand due to growth in emerging and developing countries. This trend should continue for the next decade. During the decade, mutual funds that had exposure to commodities gave the best returns.
2010 AND BEYOND
While I am not smart enough to predict the future, as many experts believe that they have this divine power, it is easy to see major trends. So what do I see for 2010?
2010 should give higher commodity prices, higher interest rates, and higher stock market prices. The mutual funds that invest in the stock market are still well positioned. My biggest concern is the interest rate increase and may make some moves in mutual funds that invest in bonds. In the past, stocks have moved esentially sideways for long time periods followed by a significant move higher. While it is impossible to predict the timing of this move, it will happen.
UPDATE ON WWEE
We are in the midst of a Worldwide Wireless E-commerce Explosion, WWEE. The signs are all around us, this is what I have seen lately:
* Smart phones are moving more deeply into the consumer market as phone makers are forming alliances to move forward. The latest entrant is Droid from Motorola and the alliance is with Google, 2 powerful companies.
* 3G advertisements between AT&T and Verizon shows that data coverage is now very important to consumers.
* Introduction of MiFi technology, where up to 4 data devices such as computers and smart phones can connect to a single node. You have seen the commercial of people in a car going down a road connected to a node in the car with this node communicating to a satellite. This is important to consumers as it lowers cost for internet connections.
* Adoption of MiFi by Ford as new Ford vehicles will offer this option.
WWEE is moving forward, make sure not to miss it.
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