We are in a very unique market environment, that I have only seen two times before in my 29 1/2 years as a professional (1983 and 1995).  Globally, there is only one bull market currently (long term treasury bonds).  All other markets: US and  world stock markets, commodities (oil and gold, -32% /-25%), muni and corporate debt, foreign debt, real estate, collectables, etc. are all well off their highs or in outright bear markets.  Money market funds are at all time highs of $24 trillion and in a spiking chart.  Either we are headed to a world wide depression (not likely) or you could throw a dart at any asset class and be up nicely in 12-18 months. I am of the opinion that this is a great time to deploy fresh capital.

But what will recover first and what will lag?  Of the four trouble spots in our economy that I discussed in our last newsletter (high commodity prices, weak dollar, crippled financial institutions and collapsing single family home prices), two have made a very decisive turn for the positive (commodities and the dollar).  These are both leading indicators and directly correlated to the US stock market.  They are both highly liquid and centralized markets and can react quickly and in unison. Stocks like falling inflation and a strong dollar.  The other two problems are lagging indicators and take much longer to work through the system.  These are not centralized: one by one the various financial institutions must solve their problems and region by region, housing will make bottoms.  My conclusion is that the traditional early economic indicator, the US stock market, will once again be the first to turn upward and start a new bull market.

In the meantime, turn off the TV.  Unless you have more than $100,000 in any single bank account per person, this financial institution crisis should not change your way of life.  If you have specific questions about your bank accounts, we suggest you talk directly to the bank or contact the FDIC to discuss your deposit insurance limits at their call center, 877-ASKFDIC (877-275-3342).  Similarly, out of an abundance of caution, we are moving all money market balances into one composed entirely of U.S. Treasuries.

We are also of course available to talk with you about any concerns or to answer any questions you might have. 

Mark

Investment advisory services are offered by Optivest, Inc. under SEC Registration and securities are offered through Gramercy Securities, Inc., member FINRA & SIPC, 3949 Old Post Road, Charlestown, RI, 02813, 800-333-7450.