September 2010


Wisdom for Washington from the Past  
"The United States has become great because we, as a people, have been able to work together for great objectives even while differing about the details."
--Harry Truman

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for  next  issue where I will discuss the Fiduciary Standard under which we operate versus the "Suitability Standard" of brokerage houses and insurance representatives.

for TD Ameritrade Institutional  
If your assets are held at TD Ameritrade Institutional, you may have noticed that all cash automatically "sweeps" into FDIC Insured Deposit Accounts. TD now has two participating banks, TD Bank N.A. and TD Bank USA, N.A. This, in effect, can serve to double your FDIC insurance coverage.
Should your balance approach the FDIC limit of $250,000 per depositor, the excess liability will automatically be transferred to the second bank, providing you with coverage up to $500,000 ($1 Million on joint accounts). This is separate and apart from the SIPC coverage on the securities in your portfolio. 
Note that deposits held directly with TD Bank, N.A., a retail account with your local branch, for instance, count toward the total. If you are approaching the limit, please let me know right away.

Challenging Times
As you have seen by now, your August statements from the various custodians where your assets are held, were not pretty. The good news is that in the few weeks since then, the equity markets have rebounded quite a bit. The bad news, of course, is that I expect this volatility to be with us for some time to come.
The REALLY bad news is that this volatility will be accompanied, I believe, with very little real growth.
Hey, can we have a little GOOD news?

My belief that this troubling time will be followed by a New American Renaissance is unshaken. "We the people" are speaking up and our elected officials are being forced to listen. As I predicted, Washington is now talking about scaling back the massive tax increase that was scheduled for January. The bickering on the details, with the necessary grandstanding and posturing, will continue until the eleventh hour and somewhere close to New Year's Eve, the President will sign the bill. It is not a tax cut, per se, but rather a postponement of some scheduled increases. I'll take it. It is good enough for now.
The pundits have also caught up to me and have finally stopped talking about a "double dip" recession. Now is the time for Americans to be unleashed, to do what we do best - to create, to develop and to innovate. America will get back to work. We will grow and we will prosper. That will be the beginning of the new era.
Now, on to my usual question - What does all this mean to you and your money? Stocks will continue to be volatile for some time to come, in my view. Remember, 10% swings in stock prices are normal and declines of even greater than that are to be expected from time to time.
When things do break out, however, I believe the right stocks will hit heights never before seen. We must be patient, though, and that is one of the great challenges. As I have written before, we simply cannot "wait on the sidelines" until the signals are all clear. The signals are NEVER all clear. The gains in stocks, as you know, come in short and unpredictable spurts.
Bonds, believe it or not, are of much greater concern to me right now. They have been enjoying a great rally, but I do fear a bond "bubble". When the growth finally comes, it could be accompanied by inflation and The Fed may try to cool that by raising interest rates. Investors could then get hit with a DOUBLE WHAMMY - bonds, depending on quality, duration and currency, could decline in value and the dividends could decline in buying power. 
For those for whom I have the privilege and responsibility of supervision, I am being especially cautious with bonds. For those who may be going it alone, I urge the same great caution. Perhaps now is the time to think about engaging professional assistance. I am always happy to hear from you.
The Intelligent Decision in these challenging times is to watch your money like a hawk, or hire a professional to do so for you
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