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.