Thursday, April 5, 2012

The Weekly Update 4-5-2012

"They don't ring a bell at the top!"

And you won't really "hear opportunity knocking!"

Instead, you either have to know where to look for real and time trusted economic data or know and trust someone who does. I think the Wealth Strategies Group monthly update of "The Seven Signs of Economic Change" have done this very well. Especially in light of the economic cross currents that have resulted from extreme government interventionion via the various stimulus packages!

The bell you might be hearing now is perhaps a warning bell to exit mid term and long term bonds and / or like managed vehicles. Here is what the bell is saying:

1) From our first President through Bush #43 our country built up a $6.3 TRILLION dollar debt.

2) The 44th President has added $6.5 TRILLION in just three years. Think about that. In 219 years we grew the debt to $6.3 Trillion and in 3 years we have doubled it!!

3) The two biggest buyers of this debt are leaving the complex. A) Per the The Federal Reserve they have purchased 61% of U.S. Treasury debt issued in the last year. B) China, who was the largest buyer of U.S. debt until last year has sold over 10% of it's holdings.

Conclusion: We have doubled our debt burden in just three years and the biggest buyer, the Fed, is scheduled to stop their purchase arrangement (Operation Twist) at the end of June 2012. The second biggest buyer has become a seller. The bell is asking who will pick up the buying after these two very large buyers are no longer buying. Perhaps a better question is.....and to whom are we, and you, going to sell your bonds to?

We have all been to parties that extend way to long into the night. As mom used to say, "nothing good happens after midnight". And at the bond party, we are well past the midnight hour!

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

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