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| JUNE 2006 NEWSLETTER The Path Ahead We have been asked whether this newsletter is addressed to you individually. While we do not resort to the “canned” variety of communication, we unfortunately do not have the capability to draft individual recommendations every month. This missive goes out to each of you monthly as a way of reinforcing the rationale that supports our individual recommendations and actions we take as we serve you daily. Our objective is to give you confidence and allow you to look beyond the news item of the day and be able to chart your individual course through these turbulent times. To review: 1. We have Asia ex-Japan as an investment sector because those economies have strong consumer demographics that allowed a middle-class to burgeon and support their economies. 2. The boom and dramatic slowdown in residential real estate proved the demographic underpinnings of our economy. How? The answer comes from noticing that even though we had a $9 trillion drop in equity values worldwide from 2000-2003, people still bid up homes at an amazing pace to unprecedented levels. Was it because they felt the “wealth effect” of their investment portfolios? No, it is because the Baby Boom, which had its peak birth years between 1957 and 1961, were reaching age 44. Age 44, is on average when a family buys its second and most expensive home because everyone is tired of sharing the bathroom. 3. Our outlook on inflation is taken from the H. S. Dent Foundation’s research that shows a correlation between a generation’s need for paying forward to educate, equip and house. This peaked in the late 70’s and early 80’s. How old was the peak of the Baby Boom wave? (Hint: subtract 1957 from 1979) So, now they are 22. Are they productive yet? No, but now at age 49, they are in the most productive years of their lives and leveraged by amazing technology. When you continually hear comments about the historic productivity of the US, you know why. More importantly, you can project it forward and be confident about the range of inflation and therefore interest rates. There is a high likelihood that we will not have to fear the high inflation and interest rates of the past cycle. There is no new Baby Boom, and the basic infrastructure is already in place for their children. We will continue this effort of communication and education on a monthly basis. We also welcome your counterpoint. The biggest take away is that we have a dogma and it has been supported by the results of the last few years. We have a plan for your future and changes that we anticipate are not going to be the result of what the media decided to excite us with this week. | |
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Defensive Portfolio Measures
FEBRUARY
The Lagging Healthcare Sector
AUGUST
NOVEMBER
MARCH
APRIL
Investing in India
MAY
Consistency
JUNE
The path Ahead
JULY
Gradually Moving Back to Bonds
AUGUST
Key Demographic Statistics
SEPTEMBER
Closed-End Funds
OCTOBER
Revising Dent's Expectations
NOVEMBER
Service Integrations
IRA ADVISOR NEWSLETTER 2006
Trow profiled in the April Newsletter
MATTHEWS ASIA NOW
NEWSLETTER 2006
The Demographics Issue
BNET BUSINESS NETWORK 2001
Ready to Retire