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  • Buy Low, Sell High - Any Questions?

    There's no doubt about it, investors are scared. After soaring upward in the first quarter of 2012, the S&P 500 Index has now plunged based on worries about the US recovery as well as continued Eurozone woes. Many investors are paralyzed on the sidelines while others are seeing their buy-and-hold portfolios look more like a roller coaster than an investment portfolio.

    However, there is an investment strategy that has the potential to take the market's lemons and make lemonade. Renown investor, Warren Buffett, follows a value-style investment strategy and has done so successfully for many years. For such investors, market uncertainty can actually mean opportunity to scoop up the stocks of good companies at discounted prices.

    This week, I'm going to review value investing and how it can bring some stability and growth potential to a portfolio. After that, I'll introduce you to Yacktman Capital Group, a value-style money manager right in our backyard here in Austin. Yacktman has improved upon Buffett's approach to value investing and we are excited to offer this emerging manager to our clients. If you are out of the market or heavily invested in buy-and-hold strategies, you owe it to yourself to check out Yacktman's Concentrated Composite Strategy.

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  • CBO: U.S. Debt Crisis On The Horizon

    Introduction

    The non-partisan Congressional Budget Office (“CBO”) released a very troubling new report in the last week of July. The new report is entitled “Federal Debt and the Risk of a Fiscal Crisis” and warns that we will face financial calamity if we do not get our massive budget deficits under control.

    The CBO report points out that the national debt, which was 36% of the gross domestic product three years ago, is now projected to be 62% of GDP at the end of fiscal year 2010 on September 30. And it continues to ratchet up every year thereafter, even in the CBO’s “baseline” (more conservative) projections.

    The CBO specifically warns that our out-of-control deficits could lead to the ultimate debt crisis when buyers of Treasury securities lose faith in the government’s promise not to default on these most trusted financial instruments. No kidding!

    I have been writing about the perils of increasing our national debt year after year since back in the 1980s when I criticized President Ronald Reagan for doing so, and every president since him. The concern was that in 20-30 years, the ultimate debt crisis would come. Guess what: it’s now been 20-30 years, and even the CBO now warns that the day of reckoning is on the horizon.

    This week, I’ll summarize the latest CBO report. After reading about it, you need to think seriously about how you will protect your assets when the day comes where US Treasury securities are no longer trusted – think sharply higher interest rates! This will be a continuing theme in the weeks and months ahead.

    But before we jump into the latest troubling CBO report, let’s take a quick look at the latest economic reports, most of which have not been favorable. It has been several weeks since I wrote about the economy specifically, so let’s get caught up.

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