Monday, February 14, 2005

Investment advice

I am NOT formally trained in investing, but I think that I have a general enough feel for how it is done to not lose all of my money. In other words,, I think that I can spot a trend and not come in last.

At the beginning of last year I started my 401k and I was 22.75% up. I spent one night reading about my different options and put my money where I thought the economy was going. I took the riskiest profile for an investor and allocated five percent more to the riskiest funds. I happened to be right.

Today, I sat down started thinking about where this year's economy was going. I can make out anything right now. The first half of last year we had excellent job reports come out and we just rode on those until the end of the year. This year I am not sure we will have the same growth that we did last year. I feel there is room for growth. I do not feel that we are an full employment, but I am not sure what phase most business are in (Investment or cost savings).

The fed is still raising interest rates, the unemployment rate is at a point that it has been near to for the last few months. If we continue on the path we have been going the past half year, we will have steady growth, but not outstanding growth. I would expect the unemployment rate to be around 4.8-4.5 by December and for the stock market to have had modest gains.

I have been looking for a little more information one what they future holds and this article is they type of articles that I have been looking for.

"Bob Prechter, founder of Elliott Wave International, answers that question in the foreword to his book, "Conquer the Crash," in which he predicts a deflationary depression: "The reason I remain willing to express my unconventional view is that I believe that my ideas of finance and macroeconomics are correct, and the conventional ones are wrong.""

I have seen this mentioned a few times at tech central. While the tech central does an excellent job of trying to stay ahead of the curve, they tend to have a lot of doom and gloom type articles. Of course, this guy does not bother telling us what to do, just what he sees coming. I guess that I would have to give him money to get his advice.

One of the biggest problems I see this year is the value of the US dollar. A soft landing is what we are going for, if we go to low to fast, it could cause a massive sell off of the US dollar among people who happen to keep large amounts of money in the form of US dollars. Of course all that cheap stuff from china will still be cheap as long as china has their currency pegged to ours. If you think for one second that China will help us out, by either unpegging their currency when we ask them to or keeping it pegged when we ask them to, you are crazy man!!

So what is the US dollar going to do? I do not know. Hell Cato does not even know. John Snow tells us not to worry about the trade deficit, which is not the same as the dollar bit it is affected by the dollar.

So what is the stock market going to do? I do not know, and I really have not found a lot of information making predictions. Though the biggest thing I see coming down the pipe is the addition of hundreds of millions of dollars to the mutual funds of America if Bush gets his social security plan through. That could create artificial demand which could then raise prices past what the market will stomach which will then lead to a crash....OR....The addition of money could create an period of instability which causes stock prices to stall or drop....OR...The addition of the money could allow investors to find new markets and fund growth in those areas further raising the rate of growth in American and world wide.

I would guess the first one will happen, which means that if bush gets his plan through, I am going to move my stocks to a more stable footing a few months after it goes into affect. I might move stay at that less riskier profile for a year. If bush gets his tax plan through, I will move to the profile I have now, and leave it there for a year then reevalute.

If you have seen any credible estimates on the future of the economy for the next year or if you have any well reasoned arguments why I should buy as many guns as possible (because that and willing blondes are all that are going to be worth any money when everything hits the economic fan), please feel free to share them.


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