Greg's eLetters

Independent insight from one of the industry's foremost expert and the NFIB State of AL and Entire Southern Region Small Business Champion

 

Most Recent eLetters:

Double Dip? I Don't Think So

July 22

After a promising start to the year, the market (as measured by the S&P 500 Index) suffered its worst two-month return ending June 2010 since the two-month period ending February 2009, which was during the depths of the financial market meltdown. The market had much to worry about as concerns over the fiscal issues in Southern Europe, the compounding problem of the Gulf Coast oil spill, an impending contentious mid-term election cycle, and the unknown consequences of Congress' financial regulation reform kept investors' fears on the rise and market returns on the decline.

Despite the many external factors weighing on the...

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"Greece-ing" the Skids for Opportunities

June 22

After rising almost 9% in the first 66 days of 2010, the market abruptly changed direction on April 24, 2010. The reasons for pullbacks are never singularly focused, but are instead a combination of things. In this case, it was the market priced for perfection running into the emerging fiscal concerns of several European countries, which was enough to reverse the market’s sentiment and thus its direction.

It is important to note that the problem in Europe...

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Market Pullback - Not a Financial Crisis

May 7, 2010

While fear is always an unwelcomed emotion, in investing fear may create opportunity. Since the recovery began back in early March 2009, the S&P 500 has risen approximately 70%, but not in a straight line. In fact, along the ascent, there have been four pullbacks ranging from 5% to 10%, including this most recent market selloff. I would argue that the selloff is not the result of increasing bad news, but rather the market became priced for perfection and perfection was unrealistic. After huge market gains over the last year, expectations grew greater and greater. The bar continued to be raised until the point where, regardless of how strong the economic backdrop was,

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2000s: Surviving the Decade

January 21, 2010

As history turned the page on another decade a few weeks ago, the word that may best describe the last 10 years is survival. After all, a huge percentage of “dot com” companies did not make it through the technology bust early in the decade, 2002 saw corporate accounting scandals drive WorldCom and Enron to the brink, and the recession of 2008-2009 resulted in some of the most storied companies falling victim to the financial crisis. Through it all, it is likely not surprising to many that the S&P 500 Index began the new millennium in 2000 at 1469 and closed the decade at 1115. One of the primary reasons of the difficult decade for investors was the fact that the 10-year time period was book-ended by two major recessions.

But 2010 starts a new decade and perhaps a new paradigm. Emerging from the worst recession since the Great Depression, economic recovery appears...

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Let The Decade of “The Tens” Begin

December 30, 2009

The decade that begins in 2010 is being referred to as “The Tens.” The next ten years will prove pivotal to the United States as we weather through the terrible and the triumphant. The first decade of the 21st Century has proven to be eventful in historical proportions... Presidential election goes to the Supreme Court, 9/11 terrorist attacks, Enron and Worldcom fraud, Afghanistan War, Iraq War, Hurricane Katrina, financial meltdown of 2008,... the list goes on and on.

The question becomes does history repeat itself? How ironic that the 20th Century’s beginnings

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Economic Lessons From the First Thanksgiving

November 13, 2009

It’s that time of year when we pause to give thanks. This year, we can be thankful that the financial well-being of Americans is improving due to the U.S.’ recovery from the recession and rebound in the markets. The legacy of Thanksgiving goes back to the bountiful harvest in the fall of 1623 that prompted the Governor of Plymouth Bay Colony, William Bradford, to “sett aparte a day of thanksgiving.” The story of that first Thanksgiving may hold important lessons for investors this year.

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The Road to Recovery Continues

August 13, 2009

We are starting to see some parts of our economy begin to heal from the big bank meltdown that started last fall. And after severe declines in U.S. GDP in the fourth quarter of last year and the first quarter of this year, the second quarter report shows a modest 1% drop in real GDP. However, many areas remain weak—consumer spending, business investment, residential construction and inventory investment were all down, while net exports (due to huge declines in imports) and government spending were up.

Looking forward, one silver lining is the big inventory decline. Inventory “corrections” like this one usually set the stage for economic recoveries as production finally lifts to rebuild depleted supplies. I expect we will see modest growth in the economy in the second half of the year.

(Read full eLetter here)

 

Markets Continue to Fret

June 6, 09

Too much good news can be bad news - at least that is how the markets see it. 

The recent string of better than expected economic data is consistent with the rapid pace of healing in the credit markets - the key driver of the recession. In fact, last week marked the 12th week that the financial indicators we use to evaluate the overall health of the economy have shown steady improvement. The data increasingly paints a picture of a still weak, but rapidly improving U.S. economy.  However, this news isn’t being interpreted as all good by the markets.

Market participants’ concerns are shifting from a potential lengthening and deepening of the recession to inflation that might be stoked by a rapid recovery. In the past, high and rising inflation has proven to be a far harder problem to solve than a weakening economy in recession.  Now that the economy is beginning...

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