A Stock Market Spectacular

Posted on January 9, 2015 by MN Gordon

What a week.  Can you believe it?  Stock prices have gone bipolar.  What is going on?

According to “Bond King” Bill Gross, “The good times are over.”  He’s predicting “minus signs in front of the returns for many asset classes” by the end of 2015.  Gross also believes falling oil prices and a strong U.S. dollar will limit the Federal Reserve’s ability to raise interest rates.

Like Gross, we believe 2015 will be a rough year for stocks.  Where stock volatility was minimal in 2014, in 2015 price volatility will be the norm.  The first full trading week of the New Year confirms this insight.

For instance, during the first part of the week stocks were down…a lot.  On Monday the DOW fell 320 points, and on Tuesday it fell 133 points.  By mid-week stocks were up…the DOW jumped 212 points on Wednesday.  Then, yesterday, the DOW jumped another 323 points.

Your guess is as good as ours as to how the week closes. Continue reading →

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The Number One Investment for 2015

Posted on January 6, 2015 by MN Gordon

For entertainment and instruction, over the weekend we took a scan of the news pages for expert tips on how to invest for 2015.  There were a variety of ideas.  These included some simple and practical suggestions…like paying down adjustable rate loans before interest rates go up.  Saving 10 to 15 percent of gross income for retirement didn’t sound like a bad idea either.

Other ideas were a bit mixed.  They sounded good, initially.  But they seemed to come up short upon further review.

For example, National Economic Forecaster Robert Genetiski says “individuals should avoid making investment decisions based on forecasts of either major short-term gains or gloom and doom.”  The first part of this advice is reasonable.  Chasing a hot stock tip is generally a bad way to invest.

But the second part of Genetiski’s advice is lacking.  Here at the Economic Prism we believe one should always consider doom and gloom when making investment decisions.  Just because something is unlikely doesn’t mean it isn’t important…especially if the risks are great. Continue reading →

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One Destructive Bad Idea

Posted on January 2, 2015 by MN Gordon

Over the years, we’ve come across many bad ideas.  Rap music, for instance.  Or legal tender laws.  But the real measurement of a bad idea is how much popular destruction it can bring.

It’s a real shame there’s no warning system, like an air raid siren, to tell people to take cover from the bad idea de jour.  For a bad idea coupled with a good story will compel vast populations to ruin themselves.  Once established, there’s no turning back.  Bad ideas must run their natural course leaving destruction in their wake.  Then they must run their course again, and again.

Communism, for example, made an utter mess of the 20th century.  Armed with all the smartest guys in the room, the Soviet Union’s state planning committee drafted up five year plans for what it called the centralized development of the national economy.

The first five year plan brought to realization the grand idea of collective farming.  What could be more efficient than commanding what crops to plant and acreages by bureaucrats in Moscow? Continue reading →

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Disaster and Other Estimations for 2015

Posted on December 30, 2014 by MN Gordon

The New Year is nearly here.  So are the new hopes and new dreams.  We’re certain 2015 will be the year you get everything you deserve in life.  But what else will happen?

Today we hold a licked index finger up to see what way the winds will be blowing in 2015.  Obviously, this isn’t an exact science.  Making predictions about the future is more art than science anyway.

But this technique is as good as any we’ve ever come across.  It is certainly better than taking a chart and extending a trend line out into the future.  For, where investing is concerned, past performance is no guarantee of future results.

Hence, chasing last year’s star performers or hot asset classes can be a good way to lose money.  Chances are you will be buying at all-time highs.  This is what most people do…they buy high and sell low.

Alternatively, investing in beaten down companies that have suffered from dreadful industry conditions can be more profitable. Continue reading →

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