Thursday, January 31, 2008

The worst January in equities since 1970 appears to be in the books.

Folks, as you know, I am precluded from making specific recommendations in this forum. I can speak in general terms.

The equity market is, in my opinion, going to swing up and down rather briskly, and will likely be very tough to stomach. The problem is, the bond market (U.S. Treasuries, Don't even THINK about corporate paper) has had the greatest of runs, and his little to gain and much too lose; real estate is in shambles. So you are stuck with with some equity exposure. If you are of advancing years, say over 55, there are products available from and backed by the world's largest insurers that will guarantee your principal while giving you most, but not all, of the opportunity for gains.

These products have been out in the marketplace for years but have really gotten their act together recently. Not too long ago I looked askance at them, but they have responded to the markets and are now designed to provide immediate income, a fixed "walk away date" or the ability to provide lifetime income. And since they protect your principal like a bond, but give you some upside if the equity market goes higher, they are, in my opinion, one of the few vehicles that would benefit in an inflationary environment. Further, as principal is guaranteed, they would not be harmed in a deflationary environment.

There is no such thing as the "perfect investment". Your circumstances, time horizon, tolerances, etc... are unique. These products are not for everyone, and you should not consider them if you need to draw on them when you are under the age of 59 1/2.

Please keep in mind that it is my view that the Fed rate cuts will lead to a lower U.S. dollar and inflation, and that in the future energy supply shortages will add fuel to the fire of market volatility.

Lastly, I am not looking for business here. These require state by state licensing, so call your own financial advisor. If they have any questions you can always email me.

Yours for a better world,

mentatt (at) yahoo (d0t) com

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