The Economy: The Fed reports after their meeting tomorrow. We’re going to press without waiting for what will be a non-event. There will be no follow-through to liftoff. Whatever is announced will be more pablum in a global economy awash in oil, terrorism, illegal immigrants and the rants of the U.S. presidential election. The slowing global economy was confirmed by Goldman Sachs who put an unheard of “sell” recommendation on Caterpillar. CAT is a blue chip and core holding for many portfolios. The sell recommendation comes as Goldman evaluates the global slowdown and sees tough times ahead. The slowdown in China just got more interesting with the head of the Chinese Bureau of Statistics arrested for corruption. Think scapegoat. Somebody other than those responsible, has to answer for the fakery and quackery that passes for economic data out of the Celestial Kingdom. Don’t be surprised to see China revise their numbers downwards before drastically devaluing the Yuan. How this plays out in Peoria is anyone’s guess. While U.S. policy makers are resolutely positive about our economy, the folks we talk with are more hesitant and concerned. With the exception of those at the defense department trough, no one is saying, “We’re gonna have a great year and we are hiring like crazy to ramp up for it.”
Food for Thought: Stocks continue to entertain. … better than any roller coaster at 6-Flags … better than canyon carving on a hot sport bike. Most investors have held on through the turmoil. So far. We continue to advise that you have an exit strategy in these interesting times. Call it a “Rubber Band” stock market. One day’s extreme snaps back the next day … only repeat the extreme again. This has been going on for a month now. Will this volatility dampen out and end, or will it continue until things fall apart? If you believe that “the markets always come back,” ask yourself how long you’re willing to wait. 2-years? 5-years? 10-years? The stock market crashed in 1929 and didn’t make new highs until the 1950’s; 20+ years later. Or take a look at Cisco (CSCO). This Dot-Com darling is still down 70% from its high in March of 2000. Some folks have been waiting for 16-years for Cisco to “come back.” Don’t let fear and greed blind you to the need for a sound game plan. Your 401k is particularly susceptible to this mistake. 401k providers and administrators do not provide investment advice. You are on your own. Take a look at your 2015 year end statement and understand what you own. All account statements are notoriously confusing. If you need help, ask. Like your second grade teacher used to tell you, “There are no dumb questions.”