It's all good - or is it! Stocks started the year up 1.1%, Bloomberg reports mortgage applications are up, Barron's this week says large cap stocks are making a comeback, most believe inflation is being held tight and Gold bubble talk is once again bubbling to the surface. Recovery is underway!
Yes! If I could turn back the hands of time, to those pre-2007 days, I would. Back then, it was hard to make a mistake when planning for retirement. A well diversified portfolio, to include stocks, bonds, real estate and precious metals, was rising at such a steady pace, it seemed easy to forecast your retirement date. Really! Everything was rising. Then the Mt. St. Helens of Wall Street erupted and the house of cards fell.
Now, after trillions in printed money and stimulus hocus pocus, there are those that would have us believe, the crisis is over and happy days are here again!
Yes, I want it to be true but I'm sorry! I'm just not buying into it. Daily I receive Breakfast with Dave by Dave Rosenberg of Gluskin Sheff. This morning, as I read, I got some sobering reminders of trouble that still lurks for our economy and the markets. I strongly urge everyone to subscribe to this publication. It's free but priceless, in my opinion.
A few things that really struck me, were his comments about unemployment and housing. Essentially, unemployment, is still a big problem in this country. As I have said before, it's hard to believe in recovery when, for more than 2 years now, recession has been defined by the growing number of people out of work.
Last week, when unemployment numbers came out, cheers were lifted as the number seemed to decline from 9.8% to 9.4%. Then the explanation came. The decline was due almost entirely to some 400,000 workers who became so discouraged in their job search that they took themselves out of the job search pool! Yaaay!
Is this how desperate we've become for good news? This is terrible news. It's like reporting the heatwave is over because the thermometer broke. Then Bloomberg reports that mortgage applications are up but reality says residential vacancies are at record levels.
As far as inflation goes, Don't worry Mon - Be hoppy! But when I put gas in my car for $3.30 a gallon last night, I really didn't find myself that excited about no inflation. And who came up with this excluding food and energy stat? Discretionary income is based largely on the amount of money we do not have to spend on food and energy. Good luck Starbucks if gas goes up to its anticipated $4 to $5 per gallon by summer.
All I'm saying is don't let your guard down. Nothing tells me the crisis is over and we're out of the woods. Our debt is not shrinking, jobs are not growing and inflation has begun to rear its head. Gold still seems the best opportunity to protect and grow your savings and retirement accounts.
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