Meltdown '06? You see it coming

This column by Paul Farrell warmed my heart, though not for what was in the column. It was the classic doom and gloom scenario. Paul asked a question of his readers - what 20 possible triggers could cause a meltdown in 06? He got many responses and was surprised that only 2% of the responses were "optimistic". My question is this: Why would expect an optimistic response when you ask a negative (pessimistic question)? Regardless, I think it is interesting to contrast the pessimistic nature of the respondents to Paul's column with the consumer confidence numbers released this morning that show a three year high. Why are his readers so pessimistic and the rest of the U.S. apparently is not?

I don't know the answer and don't really care to find out. The point of this blog is to communicate to you, my readers, and so far this year most economists have quite upbeat about the economy and the market and its prospects, so upbeat (and in stark contrast to the previous five years) that has scared me. These people are usually wrong and they are upbeat....does that mean things are about to go bad? Then came Paul Farrell's column and his prediction that their is an 86% chance the American Economy will collapse and thus my heart began to warm and my outlook began to change - perhaps, just perhaps this will be a good year for the markets after all!

Ironically, Paul and I have the same advice even though we have different viewpoints, I'll defer to Paul's quote "In my opinion, your best bet in a major collapse is to stick with a solid old-fashioned well-diversified no-load index portfolio. It worked during the 2000-2002 recession and bear."

Of course, now I'm rethinking my advice in light of Pauls!

ScottyD

Your Interest or Theirs?

I love this link, its from an annuity marketing company that is willing to send licensed insurance agents on trips to the Ritz Carlton.......if only they sell certain products through their company.

Whose interest are the agents who give into this baloney protecting, theirs or yours? Selling products to people to earn vacations is what got Morgan Stanley a $50 million fine - guess the regulators haven't caught up to the insurance companies yet.

This is just ridiculous.

Scott Dauenhauer, CFP, MSFP

Doubting the Dow

Smartmoney.com: The Pro Shop: Doubting the Dow

Good article on why watching the Dow is a waste of time.

Scott Dauenhauer, CFP,MSFP

Fund Manager Arnott Raises a Thorny Debt Question

Bloomberg.com: Bloomberg Columnists

"What if today's children grew up and repudiated their parents' debts?
Suppose they walked away from the bills accrued via government deficits, not to mention all those credit cards. Imagine the global tumult if they simply refused to carry the burden of under-funded pensions and the U.S. Social Security system."


Interesting article....though Arnott is being rather alarmist. I use his fund in the minute possibility he is correct, but I don't buy into the chicken little scenario some are espousing.

Scott Dauenhauer, CFP, MSFP

What Investors Can Expect From the New Year

What Investors Can Expect From the New Year: The Future for Investors - Yahoo! Finance

Jeremy Siegel is quite bullish on stocks this year and next, of course the future is impossible to predict with any certainty and there are a number of things that could derail the rise of stocks.

This is a good article on what to expect this year, though I feel its a better article as to what to exepct over the next decade.

Scott Dauenhauer, CFP, MSFP