ProfitScore IQ

In This Issue:

A Brief Performance Update
Hindenburg Omen - Riding a Lead Zeppelin?
Looking To the Presidential Cycle
Oily Omen
More Transport Weakness
Cash Collared Consumers
Housing Holdouts
Employment-Challenged Economy
So what's next?
Time to Put on My Coaches Hat & the BSU Broncos

A lot has changed since my last letter.  Many aspects of worldwide markets have seemed to turn on a dime and are pointing to a volatile future.  Unlike my last few letters, there is no silver lining in my tone.  This letter will print longer than normal because of all the charts and graphs. 

One of my favorite leading indicators on the health of the economy is the Growth Index from the Consumer Metrics Institute.  It does an astonishing job of taking the pulse of the American consumer.  Most other consumer based indicators are lagging by months, but this indicator gives weeks, and sometimes months of lead time - making it a very unusual and helpful indicator about the economic future.  If you are not familiar with this index, below are some helpful charts and comments to jumpstart your learning curve.  It is currently firing a thumbs down. 

It seems like every data point we turn over we find nothing but slimy snails and worms, and my general comment after massaging the numbers is yuck!   When I think about the unconscionable amount of my children and grandchildren's future that has been mortgaged to produce the worst economic recovery since the Great Depression, it makes me want to pull my waste basket out from under my desk and purge my lunch.

In This Issue:

Our Monthly Performance Update
Dr. Howard Bandy Has Joined Our Team
An Important Change to Our Equity Allocations
The Most Important Charts of the New Century
Surfing the Money Tsunami
Bubbles of the Far Away Kind
Making Everyone Else Rich...
If You Can't Beat the Fed, Join Them
Interesting Reading
Spokane, Reno, and Orlando

The United States is very fortunate to have a front row seat to Europe's, and soon Japan's, sovereign debt crises. Going through the second phase of the credit crisis will be difficult short-term, but learning hard lessons from our neighbors will soon turn our ship out of harm's way and ensure the long-term economic viability of the United States. It's not that we're smarter than our comrades across the pond, it's just that our economic cycle is five to ten years behind theirs.

When this sovereign debt crisis finally plays out, socialism as currently defined by Europe, will no longer exist. As the book, The Fourth Turning clearly documented, humans have a nasty habit of hitting the reset button every 80 to 100 years. The Romans and Greeks recognized and documented this destructive and rebuilding phenomenon in their own culture.

In This Issue:

Our Monthly Performance Update
My Decision on Buying My Next House
Cocaine, Profits & Your Brain
Top Ten List of Risks to Watch Out For
Interesting Stories 
Portfolio Performance Analysis
Basketball, Dancing and Mom's Scavenger Hunt

In this letter, I have produced my top 10 list of risks I see in the immediate future.  Several months ago, Greece would have been lower on my list.  However, economic conditions are very fluid and seem to be changing at increasing speeds.  I will also discuss my decision on when I plan to buy my next house.  For those not familiar with my housing saga, I sold my house in May, 2006 because I fortunately saw this housing crisis approaching.  I have been renting a home since then, and now my rental contract is due for renewal in March, so I need to decide whether to buy a house or continue to rent.  I'll outline my research on this decision.

In This Issue:

Our Monthly Performance Update
Dollar Reality Check
Are Valuations Justified?
The Mother of All Carry Trades
Market Summary
Portfolio Performance Analysis
Can I Do It This Year?

Timing is everything and being early with your investment decisions can be almost as painful as being late.  Since most investors lost significant sums of money in 2008, they feel a deep-seated fear of getting left behind.  It is called the heard instinct.  This important emotion kept us alive when we hunted with knives and spears, but today it runs investors off a cliff.  In dealing directly with retail clients, the heard instinct is the most prevalent emotion I see.

In This Issue:

Global Home Price Comparison
Lessons from the Forgotten Depression
Resisting the Intervention Urge
Chaining the Tiger
More Difficult Than Timing the Market

Quote of the week
"Institutional equity investors fear missing out on the rally. Bond investors fear deflation and the stock market is way overdone and is ripe for a steep correction. The gold bugs fear that the fiscal and monetary largesse globally will lead to inflation and fear that the U.S. dollar is on the verge of collapse. Never before has fear felt so reassuring - pick an asset class, and it's going up in price." -- David Rosenberg in a recent newsletter to clients

In This Issue:

Warren's "Desert Island" Indicator
So What Is It Telling Us?
The Weekly Rant - The Rocket-Riding Stimulus Junkies
Moose for Dinner

In This Issue:

An Update on Our Performance
Incomes - A Four-Decade Long Report Card
The Incredible Shrinking Work Week
The Curious Case of Hourly Earnings
What a Difference a Week Makes
What's a Buck Worth?
Incomes Just Don't Buy What They Used To
Wow, I Didn't Know That!
Questions and Comments
Definitions
Take My TV Challenge

Tuesday, September 14^th marked the first anniversary of the collapse of Lehman Brothers.  This historic event almost brought our financial house down and exposed a multitude of inherent Wall Street vulnerabilities in the process.  Only time will tell if the government response of throwing trillions at the problem to bail out industry giants like Fannie Mae, Freddie Mac, Citigroup, Bank of America and AIG, deemed "too big to fail," was the right move.