"Diversification is a protection against ignorance. It makes little sense for those who know what they're doing."
~ Warren Buffet
The Professional Opinion
S&P 500 Index: 1115.1
Bull vs Bear
Heading into the new year a bear market decline in excess of 20% is not likely. 5-10% corrections are, and are usually followed by new bull market highs.
LEI - Leading Economic Index
The LEI has risen for eight straight months which translates into an annualized rate of a bit better than ten percent.
Six of the ten leading economic indicators advanced in the month of November
ICEI - Index of Coincident Economic Indicators (Learned a new Acronym today)
What is it?
It is a compilation of statistics which are merged together to produce one number for tracking the economic environment.
Statistics Factored In:
The Unemployment Rate
Average weekly hours worked in manufacturing.
The current reading is 100.1
Now you know as much as I care to know.
The Economic Recovery
Real GDP is projected in the 2-3% range for 2010.
At some point the Fed will have to begin withdrawing all the added stimulus when the economy gets into a real recovery. How the Fed handles this is a big question mark. Let's hope for the best.
1. Industrial production has risen for the fourth time in five months.
2. Retail sales rose in November to 1.8%
3. The CPI rose .4% in November, bringing the year over year inflation rate to 1.8%. Out of control inflation is still a long ways off.
4. The soft US dollar has stiffened up a bit, but continues to help exports.
5. The market continues to be reasonably priced based on the earnings outlook.
Question: How does one know when government stimulus is no longer needed?
Answer: When consumer spending absent government programs and the like overtakes federal stimulus efforts.
A Model Portfolio Change!
The Vangard FTSE All-World ex-U.S fund (VFWIX) has been added to each of the three model portfolios.
This is an index fund which invests everywhere except the U.S.
I don't think I will be jumping into this one anytime soon.
Bob also mentions that he has been named once again to the Hulbert Financial Digest honor roll, which I find kind of hard to believe considering this last time around that he rode the bear all the way to the bottom with no substantial changes to any portfolios.
This was the result of, "Superior fund selection combined with our fully invested position."
Pardon me while I choke.
Other than that, remain fully invested and buy on the dips.
This is one unhappy Junco and one great picture. This in theory could personify portfolio lift-off for the rest of the year.
Lots of headwinds, though.
Chief among them the knotheads in congress who wish to subvert the US of A to someone's perverse dream of a Utopian society headed up by the Libs. Say a prayer or two for a change in direction in 2010 because if that doesn't happen, please note the final photo.