Better ways to seek your fortune

sound prudent financial advice for hard times :

James Foytlin

jamesfoytlin@optonline.net
toll free 1(866)492-3959

Citi Never Sleeps ...snore

As I have said many times all financial crises in recent generations seem to begin and end with Citibank. Weather it’s the late 1970’s with the Latin America banking crisis or the Early 90’s financial melt down all roads as they say lead to Citibank. It seems when Citibank stocks goes below $10 the end of the crisis may be at hand. It was that way in the early 90’s when the same pattern as now brought several major investments from a white night or should I say a Saudi Prince and some additional help from Uncle Sam. No mea culpa was forth coming from Citi as none will be now. The bank was propped up by a combination of government aid and outside investors. Then as now no great proclamations were made, no show trials were had and no politicians patted then selves on the back. The fix was in and the financial system began to resurrect its self. Let’s hope that once again the recent bailout of Citi signals the same.

“no reason to buy is reason enough to buy”

Treasury Secretary Paulson always good for 100 points to the down side on the DOW once again made a failed attempt to reassure markets that someone in Washington actually knows what they are doing, but alas the markets weren’t buying. Students of market physiology would suggest that “no reason to buy is reason enough to buy” so perhaps an over sold condition coupled exhausted sellers may produce a reflex rally at this juncture. There are 4 ways in my view to play this: 1) the long term short ie... investing in the decline of the market thru indexes 2) Investing in quality stocks and bonds that pay excessive dividends and interest hoping to out last the return of the “Carter administration” 3) the market will from time to time offer unusual high risk trading opportunities due to excessive volitility and 4) safety would suggest that unless you have at lest a 4 year horizon best to allocate more money to cash

Sometimes market events are bigger than any of us. The stock market has gone through a period of major turmoil and in the trailing 12 months has the S&P 500 down a sizable 37.47%. There have been major dislocations in the economy especially in finance and banking. A complete crisis of confidence has griped both the government and private sectors. The bond market, mortgage market and commercial paper market have frozen. Even money markets have broken the buck and banks have failed. Large government initiatives have been needed and shot gun weddings have been manufactured to prop up the ailing bank and brokerage sectors. The worse financial crisis since the 1930’s has left little growth in any type of investments.

You don’t have to be a college graduate to figure this one out.

So the worst 2 day sell after a presidential election and still investors wonder why, well folks its simple:

The new administration has talked about higher corporate taxes; higher personal income taxes; higher capital gains taxes; higher taxes on dividends and a government take over of 401k plans. You don’t have to be a college graduate to figure this one out.

Look for the new administrations choices of economic advisors and key fiscal appointees to divine the leadership direction from the campaign rhetoric. No one seems to have any clue how President Obama will govern. Will he as critics claim lean far to the left and sit down with Hugo Chaves or will he embrace the Clinton legacy and push hard toward the center pursuing free trade and welfare reform and perhaps even some tax cuts?

The perception by many is that he is a smooth talking good looking empty suite who will be filled with the ideas of his big money supporters and there proxies. Again critics assert that it’s more likely the views of Weatherman Bill Ayers and his ilk that have the most influence President Obama again the key is his choices of his key economic advisors.

There is also a third possibility which harkens back to the Carter Era when and aggressive congress confronted a weak inexperienced President. President Obama for sure lacks experience but I am not sure this Congress is either smart or shrewd enough to run the show.

The other key issue is energy policy for if the new administration harkens back to a conservation at all cost philosophy instead of a focusing on the discovery and promotion of new resources I fear we will very quickly see the return of vastly higher energy prices due to constrained supply.