Special "Holiday" Update #13
IN THIS ISSUE:
2. What I Am Thankful For
3 Surprise: Bin Laden Gone?
4. The Economy - Not So Bad
5. BCA - Forecasts For 2002
6. ProFutures Investment Services
7. I'm A Political Animal, I Admit
8. Tom Daschle - A Shill For Dem's Leadership
Also, Dem Poll Shows America Trusts GOP
I began these Special Updates shortly after the events of September 11th. My initial mission was to try to bring you interesting information that was either not being reported by the media, or was being misinterpreted by the media, given the media's obvious (to many) bias. Since then, the Updates have taken a life of their own, partly driven by your comments and suggestions, and also by my own topics of interest.
In any event, we are now up to 13 Special Updates, and we have hundreds of people who have gotten on our e-mail list that I do not know. I do not know if those of you who are not ProFutures' investment clients are young or old, what your interests are, what your political leanings might be, or even if you actually read these Updates. I assume you do, or else I would think you would unsubscribe.
I don't know if the majority of you are looking to me for investment advice, political analysis, or news and information about the war on terror that the media is either not reporting or is spinning in their liberal bias. Without such knowledge, I have been writing these Updates and reporting whatever is important to ME. I hope it is to you.
I still don't know what the future of my Special Updates will be. Will the interest peter-out after awhile, and I stop doing them? Or will our e-mail list just continue to grow, and I keep it up? Either way, your feedback - positive or negative - will determine the future. So, LET ME HEAR FROM YOU, one way or the other.
WHAT I AM THANKFUL FOR AT THIS
MOST SPECIAL TIME OF THE YEAR
I don't know about you, but I have been shaken by the terrorist attacks of 911. My life has certainly been changed. I have followed the events and stories surrounding 911 as no other story I have followed in my career. Yet despite the tragic events of 911, I am more thankful for than ever this year (in this order):
1. Faith in a God of grace, forgiveness and love - a God who desperately wants only good for us, despite our weaknesses and sins - and NOT a god of vengeance and hatred who would condone the massacre of innocent people in the name of religion;
2. That I got wise 14 years ago and married DEBI, my lovely wife, best friend and business partner of almost 20 years, and that I am still madly in love with her;
3. That we have two wonderful (most of the time) children, Tyler (11) and Jordyn (9), that I adore, and that I have been able to be so much more involved in their lives through coaching both of them in baseball, basketball and football/cheerleading (Mom), year-round for the last seven years, with no end in sight;
4. Our family and extended family that we have become closer to in the last 2-3 years due to deaths in the family and pulling together;
5. That I am still in excellent health, as far as I know, even though I will turn 50 (50??? - how can it be???) next March;
6. That we have several thousand loyal clients despite the last couple of years during some very difficult investment markets and returns that have been less than we all hoped for;
7. For our wonderful staff of dedicated employees at ProFutures that seem more like a part of our family than co-workers; and
8. That I still love reading, learning, staying on top of things in our world and writing about many things in a way that can help people distill the truth (I hope).
I feel truly blessed to have the life I have. You probably do for your life as well. The events of this year, perhaps as no other, have made us all be appreciative of things we may not have fully recognized before this year. Like living in the greatest country in the world. Like having more freedom than any people in the world. Like so many things I could go on and on about.
BIN LADEN CANNOT BE FOUND:
SURPRISE, SURPRISE, SURPRISE!
Were you the least bit surprised this week when, after our Special Forces got into the caves at Tora Bora, and they admitted that Osama bin Laden (OBL) could not be found? Or did you think, like I wrote last time, that he would be long gone? Frankly, I thought this was a NO-BRAINER, that he would not be found in Afghanistan.
I don't know about you, but I have turned a deaf ear to the media's continual speculation about where he is. I have little doubt that he will be found, but I have no illusions that it will be soon or under what circumstances.
I wonder what bin Laden feels like. Apparently the attacks on the World Trade Center and the Pentagon inflicted much more damage to the 'Great Satan' than he initially expected. But how far does that kind of gratification go when you are a marked man for life, and personal contact with your family is history? Again, is there a god of hate and vengeance? If there is, I'm glad he is NOT the God I believe in.
THE ECONOMY - IS IT AS BAD
AS THEY SAY? I THINK NOT.
Not knowing any more than I do about the growing list of folks who get these Special Updates, I don't know how technical to get in analyzing the economy. It's not an easy subject to write about due to all the intricate factors that go into such analysis.
There are always two sides to any argument. As for the economy (and this is not new), there are those who believe this will be a brief, mild recession, and there are those who believe it will be the worst thing since the Great Depression. By the way, extreme views have always existed.
Those knowledgeable and passionate on both sides of the economic debate can present very compelling arguments to support their views, with lots of facts and statistics. With all the talking head shows today, you can hear these spirited debates every single day, if you care to and have the time.
Many people hear the compelling arguments and tend to agree with whichever side they heard last. After a while, though, it can get quite get boring, and even irritating, as people are whipped back and forth among the various so-called "EXPERTS" (often self-proclaimed) - especially with today's media that trots-out PAIRS and PAIRS and more PAIRS of analysts with opposing views.
My gift over the years, if I may call it that, has been the ability to take complicated subjects and break them down to levels that even 'Aunt Martha' can understand - and in writing no less. On the assumption that we have a lot of e-mail subscribers who are not economists, let me boil it down to THIS (over-simplified, I admit), in regards to the economy (in this order).
1. If this recession was going to be very deep and long-lasting, as some promise, the economic news would be MUCH WORSE than what we have seen over the last couple of months. Over the past two months, we have seen a fairly balanced plethora of good news and bad news.
2. Yes, industrial production has continued to fall for over a year, but that's what happens in a recession - businesses slow down making things until they can work down big inventories that were stockpiled during the boom times. This is not new.
3. Yes, unemployment has risen and consumer confidence has declined in recent months. Businesses always cut their workforce in bad times, and this invariably leads to falling consumer confidence. This is also not new.
But the fact is, at least in my opinion and those I respect the most, if this were going to be a really bad and long-lasting recession, the news would be MUCH WORSE by this point in the cycle. We wouldn't be getting the increasingly good news we have seen in recent weeks.
I don't see any point in trying to speculate on when the recession will end. Some think it will end in the first quarter (1Q) of the new year. Others say it will end in the second quarter (2Q). Still others say it won't end until the third quarter (3Q) or later. My point is, NO ONE KNOWS. More importantly, whether it ends in the 1Q, 2Q or 3Q, it will still be a MILD RECESSION in the history books. This assumes, of course, that there will be no more major terrorist attacks.
You can think whatever you want. You can believe the gloom-and-doom crowd that believes (as they always do) that we are headed over the proverbial cliff - recession then depression. Yet there are no compelling facts to support this view, at least not so far.
Or you can believe, as I do, that this will just be another mild recession which will be over 'sometime' next year. I may change my mind later, but it will take more facts and information than we have today to convince me.
THE BANK CREDIT ANALYST -
FORECASTS FOR 2002
Again, for the benefit of those who have gotten on this e-mail list only recently, let me take a few sentences to identify THE BANK CREDIT ANALYST (BCA). About 25 years ago, one of the smartest clients I ever had told me about a Canadian research firm which published detailed analysis about the US economy and the major investment markets.
Even though the cost was prohibitive (today it's $845 yr./12 issues), I first subscribed to BCA in late 1976 or early 1977, I don't remember which. I have never stopped, despite the increasing price tag. Each month, BCA provides 30-50 pages of in-depth analysis of the US and world economies and the major investment markets.
BCA is not perfect, but they have been consistently the MOST ACCURATE SOURCE I have ever found for such analysis. Here are their latest predictions for 2002:
1. The economy will begin a "moderate recovery" in the first half of 2002 which should continue throughout the year and into 2003;
2. The stock markets will move "tentatively higher" in 2002, buoyed by a slow but increasing turnaround in corporate profits, but not without continued high volatility;
3. While the Fed will keep short-term interest rates low all next year, long-term interest rates (bonds) saw their lows in November and are likely to "edge higher" in 2002.
What does this mean? First of all, it means that BCA does not expect the current recession to be severe or long-lasting, much as I suggested above. They believe we will see increasingly positive news, along with decreasingly negative news, about the economy in the months ahead.
Second, BCA believes that the stock markets bottomed in the severe decline just after the events of 911, and that they will continue to advance in 2002, although not without more gyrations up AND down along the way. BCA believes investors should be back in the stock markets with "average holdings" (not above average, not below average). They expect to shift from "average holdings" to "above-average" exposure as soon as it is clearer that the economy has turned the corner.
Third, BCA believes that the "bond market peaked" (topped-out) in November, and that long-term interest rates are more likely to move higher than lower next year, especially when the economy gets turned around. Therefore, they advise investors to move to a "below average" position in bonds, especially in Treasury bonds where many investors flocked after the events of 911.
A WORD OF CAUTION: Obviously, I have great confidence in BCA, and their record of forecasting the economy and the investment markets has been far better than anyone else I have read over the last 25 years. However, in regard to their forecast for stocks over the next year, I would not advise anyone to read this and then rush out and put all your money in stocks or mutual funds right now. While I agree with BCA that stocks will move generally higher next year, a lot of popular stocks have been driven up sharply in the last few weeks. Many of these stocks could easily take a beating just ahead, even if it's only temporary. So, unless you are quite experienced, you might want to wait and see if the market has a "correction" (downward movement) so that the overvalued stocks are not as risky as they are today.
PROFUTURES INVESTMENT SERVICES
For those of you new to us, ProFutures is an investment advisory firm that I (and Debi) founded in 1984. Unlike most investment firms, we do not directly manage any investor accounts. We do not hold any customer funds.
I do not make any investment decisions for our clients, as I learned years ago there are people who are better at it than I am. Rather, our specialty is scouring the US and the world for successful third-party money managers to recommend to our clients. Typically, these money managers pay us a portion of their management fees for introducing clients to them.
Studies have consistently shown over the years that most investors do not do as well as the market averages when they try to manage their own accounts. In fact, the numbers are pretty staggering. According to studies we have written about often over the years in our newsletters, the average investor running his/her own portfolio makes only a fraction of what one would have done if they merely bought an index mutual fund and held it for years.
That's where we come in. We look for professional money managers who have successful performance records. They make the decisions on which funds to be in and when to be in them.
We also have several professionals on our staff who are experienced in investments and financial planning (Certified Financial Planner) and who can help you tailor an investment plan that suits your particular goals and objectives. We can recommend a diversified investment strategy that includes stocks, mutual funds and other investments that can meet your needs.
With a little personal information from you (which is STRICTLY CONFIDENTIAL), we will provide you a customized investment plan - free of charge - to suit your situation, whether you are a sophisticated investor or you are just getting started. Our several thousand clients live all across the US and abroad. We welcome their calls, as often as needed, to discuss how their investment plan is going. In today's high tech world, your financial advisor doesn't need to be in the same place you live.
Best of all, we never pressure anyone to invest a dime. We DON'T HAVE TO, thankfully. We have no commissioned salespeople. We have three financial planners that I personally selected, and who share my no-pressure approach and long-term view of investing.
If you need assistance with your investments, we would be happy to assist you. You can call us toll-free at 1-800-348-3601, or you can e-mail us at email@example.com.
'Nuff said. It's up to you!
MOVING ON TO THE LATEST
POLITICAL TOPICS OF INTEREST
If you haven't figured out by now, I am a political JUNKIE! Politics have dominated my attention for over 25 years, and even BEFORE I had any party leanings (REP or DEM) or any ideological persuasion (CONS or LIB). One of the main reasons for my obsession is the fact that politics has such an impact on our lives and the investment markets. Believe me, depending on who/which party is in control, the investment markets can swing wildly at times.
You may agree with my political analysis, or you may not, but I'll bet you one thing: I'LL MAKE YOU THINK!
UNDERSTANDING TOM DASCHLE -
A SHILL FOR THE CLINTON LEFT
By Spencer Wright
When most people think about the head of the Democratic party they don't think about DNC Chairman Terri McAuliffe. They think about Senate Majority Leader, Tom Daschle of South Dakota. After all, he's in the news every day, you see his face, you hear his speeches, and he is even photographed with a man he truly despises, the President. Yet Daschle is NOT the leader of the Democrat party! That is done from far behind the scenes by a group I like to call the "Four Horsemen." They are: Terri McAuliffe, James Carville, Paul Begala and Bob Schrum.
Doubtless some of these names ring a bell. James Carville ran Clinton's 1992 campaign and has been an ardent apologist ever since. Paul Begala has been attached to James Carville since college, served as an advisor to Clinton and is now a free-range, left-wing political operative. Bob Schrum is an ultra-populist, class warfare inciting race-baiter, who was at the ideological heart of Al Gore's 2000 Presidential campaign. Terri McAuliffe is a life-long Clinton henchman and mega fund-raiser, who was personally installed as the head of the DNC by Bill and Hillary before leaving the White House.
Why is it important to know who these guys are? Because they control the Democratic party. Make no mistake, Tom Daschle is just a shill. They think it, he says it. Have you noticed that we are in the "Bush recession"? This is one of the talking points being trumpeted by the Horsemen on the talking head shows. Never mind that the economy turned downward on Clinton's watch, and was further harmed by 911 attacks, none of which has anything to do with Bush!
Unable to assail President Bush on character or foreign policy, the Horsemen have decided to squelch Bush's domestic agenda. They clearly plan to paint Bush as an uncaring, cold, and out- of- touch Reaganite. Remember, these guys are the fathers of the "permanent campaign" strategy. Which is why they are willing to imperil the domestic health of the country in order to gain political advantage. They don't believe in governing, they believe in power and who has it and who does not. Just like the Clintons.
The strategy of trying to beat-up the other side is not restricted to Democrats. Republicans are guilty of it, too. However, one would think that in a time of crisis, a time of great national unity and a time of war (terror), the Democrats would set-aside their partisan plans in the best interest of the country. Not so! Not yet anyway.
The Democrats did some polling recently, the results of which got leaked to the media last week. The polls show that Americans overwhelmingly trust the Republicans and President Bush to run the economy and the war over the Democrats. The Dems were crushed over the news! This, you would think, would make the Horsemen shelve their plans to derail Bush's domestic agenda, and hope their popularity improves. But they haven't. You have to wonder why.
Here is a good possibility. Perhaps they WANT to recession to continue! Clearly, Bush is unbeatable today. Barring some major mistake in the war, Bush should be re-elected in a landslide in 2004. But what happens if the economy is still in the tank a year from now or longer? Bush's popularity would no doubt decline, just as his father's did before the 1992 election. Americans, as united as they are today, are impatient. The Horsemen know this.
So, could it really be the Horsemen's plan to keep the economy in a recession as long as possible - even to the 2004 elections? Maybe. There is no question that the Horsemen are jockeying for position in 2004. They have decided, short of a major blunder by the Bush administration, they can't win, at least currently.
What they probably can do is enlarge their majority in the Senate in 2002. This currently looks very likely, given the particular Senate races and how they stack up. If the Dems do gain more seats in the Senate next year, that could render the Bush domestic agenda still-born for another two years.
The Horsemen hope that they can use this against the President in 2004 as they pave the way for, you guessed it, HILLARY. Barring some major blunder on her part, Hillary will run for president in 2004. I have no doubt that this is THE PLAN.
BUT WHAT ABOUT THE
While the Horsemen are hatching their clever schemes and spoon-feeding them to Daschle, he is beginning to falter. Tom has been too heavy-handed and obvious in his snubbing of the Bush administration. Daschle is being labeled as an obstructionist, and it is starting to stick. In his efforts to do the Horsemen's bidding and derail the GOP domestic agenda, Daschle has shelved too many important pieces of legislation. These are bills that clearly have the votes to pass, but Daschle exercises his power as Majority Leader to block these bills from ever coming to a vote.
This is, at long last, drawing the attention of the mainstream press. The new focus on Daschle is only a part of the larger Republican strategy. It seems that the RNC, now helmed by the aggressive Marc Rociot, in conjunction with the White House (read Karl Rove), have set out to hang Daschle with the obstructionist noose. If they can do this, the Horsemen's grand plan will unravel leaving Tom the Shill out in the cold, having failed in the service of his masters.
It will be most interesting to see if the Dems pick up as many Senate seats as they expect. I'm not so sure. For one thing, President Bush will be out there campaigning hard for Republicans, and especially those who are in close races. With his approval numbers still soaring, his coattails should be long and strong.
It will be even more interesting if the Bush administration finally gets fed-up with Daschle and the Horsemen's actions, and the President goes on TV to tell the nation just what is going on, who is responsible and how it is a detriment to the country. I wish he would do this! Maybe he will at the proper time. Let's hope so.
Wishing you good cheer & special moments,
Gary D. Halbert
Forecasts & Trends E-Letter is published by ProFutures, Inc. Gary D. Halbert is the president and CEO of ProFutures, Inc. and is the editor of this publication. Information contained herein is taken from sources believed to be reliable but cannot be guaranteed as to its accuracy. Opinions and recommendations herein generally reflect the judgement of Gary D. Halbert (or another named author) and may change at any time without written notice. Market opinions contained herein are intended as general observations and are not intended as specific investment advice. Readers are urged to check with their investment counselors before making any investment decisions. This electronic newsletter does not constitute an offer of sale of any securities. Gary D. Halbert, ProFutures, Inc., and its affiliated companies, its officers, directors and/or employees may or may not have investments in markets or programs mentioned herein. Past results are not necessarily indicative of future results. Reprinting for family or friends is allowed with proper credit. However, republishing (written or electronically) in its entirety or through the use of extensive quotes is prohibited without prior written consent.