What We've Seen in Our First Year
Part 1 of 3
It is now 12 months since we started this little educational project known as the GreenThought$ newsletter. I want to thank you for giving us a try, and allowing us to share with you our opinion, research and insight on the investment markets, the business of money management, and anything else we feel is of interest to our readers.
During the year, our weekly readership has increased from 100-200 investors and investment advisors to an average audience of over 700 in recent months. We hope that is a sign that GreenThought$ has attacked topics of interest to you, and done so in a manner that is enjoyable, even when we address issues that are more necessary than they are exciting.
I would like to thank the TEAM at Emerald Asset Advisors who have contributed their ideas and opinions to help shape many of the issues. In particular, we are very fortunate to have Suzie Dean, who compiles GreenThought$ and delivers it to you.
Thank you for navigating a truly fascinating year along with us! We welcome your opinion and feedback about how we are doing and how this publication can better meet your needs.
Whether you are a new reader of the newsletter or have been with us the full year, we felt this would be an excellent time to review some of the key points made during the first 12 months of GreenThought$. We'll do this in three parts to stay true to our 2-minute per issue time limit. You will see the next two over the next 10 days. Here is the first segment:
From "Where's Voldo" - 8/1/07
High volatility implies an element of fear in investors' current attitudes. Understanding of the way the rules of engagement for risk management and return strategies change (and they can change a lot) is the key. The difference between fearing volatile markets and capitalizing on them is, in our opinion, a key element to the long-term success of any investment strategy
From "Home Wrecker" - 8/8/07
The economy is very possibly approaching recession in part because consumers used their homes as ATMs (mortgages with little or no money down, refinancing), and now the ATM is closed. Is it really in the interest of the overall economy to make it easier for people to commit the same mistakes? We think not. Furthermore, our government is in no financial position to fund something like that, at least without it leading to higher inflation as they flood the economy with money to pay for it.
From "Are Investors a Generation Behind the Times?" - 8/16/07
Our concern is that what is now commonly-accepted investment advice, such as
1. Diversification - the more the better
2. Asset Allocation is more important than investment style or security selection
3. International investing shields one from some problems in the U.S.
4. Bond funds offset periods of weakness in stocks
all deliver an oversimplified message to the investor, and the advisor does not always separate the reality of these concepts from the mythology that is part of each one.
From "Wimpy" - 9/19/08
So, where do we look for inflation indicators? We look at commodity prices - oil, gold, agriculture, etc. All have been rising for some time now. Oh, but remember, all of that oil and agriculture stuff is not "inflation" as the suit and tie crowd defines it. When it comes to long term trends in inflation, we look at the yields of long-term bonds (10 year, 30 year maturities). They have been passive for some time, but there are issues looming like a parade of hurricanes, one behind the other: the cost of the war, the Social Security system heading toward the red (by 2017 according to one report we read recently), etc.
The question we have is, how are we going to pay for all of this? If you are the government and own the Mint, you can print more money. That pays your debts but devalues your currency (seen the U.S. Dollar's value lately?). When you hear that the Fed is "pumping liquidity into the system" there is a good reason - they are the only ones left who can.
(c) Emerald Asset Advisos
www.emerald-eas.com
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