Today's Market
by Dr Invest

We have been watching the performance of the bond portfolio of
TIP and BND. Remember that Monday, our gain for TIP and BND was .33% and today our gain sits at  1.36%. This is a relief for a bond position that had declined over the past 30 days.

I don't know if renewed hopes for a stimulus will change this temporary rise in the bond portfolio, but for the past eight months stock prices have risen without real fundamentals in the market. Marc Faber commented today: When you look at the major economies, Europe, the U.S., China and the emerging markets that are dependent on China for growth, I only see weakness. "Europe is already in recession, Germany is still growing very, very slightly, but is likely to go into recession soon. Growth in the U.S. is also falling off. The U.S. economy has decelerated and I don't see much growth in the next six to 12 months. There's also little the Federal Reserve and other policy makers can do to turn the U.S. economy around. I think that if you look at the injection of liquidity and the intervention by the Federal Reserve and the Treasury with fiscal measures, it has already impoverished the U.S. economy. The deficit is $1.3 trillion and in my view, will go up. There is only 100% chance of a recession."

If you take Marc Faber as only being half right, the economic future is omnius. My estimation is that around 12 to 14% will come out of an inflated stock market with a rebound in stocks from the end of October to the first part of 2013. These are only estimations because the FED is making the rules and manipulating the market. Should Israel engage Iran in war it is "Game Over". Our already weak economy would slip over the cliff.

 

So I will continue to plan for investments that are most likely to produce gains and use stop-sells to limit losses. Although the magic total portfolio return from past years has been around 8% in the most recent years the estimated total portfolio return (TPR) sits at 4%. Unless we see inflation move into the market, a 2% return is probally the satisfacory TPR. (Am I really saying this?) 2013 could usher us into a recession, deflation, and then several years of outstanding returns.

 

For now, let's just set our goal to survive our present economic climate.

 

(Note: the above information is for entertainment purposes only and not to be used as investment advice.)