ITA Wealth Management

Yesterday’s 411.3 point decline was further evidence investors are coming to the conclusion - nobody is in charge.  This president has showered, zipped up his gym bag and is about to board the bus.  Unfortunately, it is still 68 days before the bus heads for Crawford, Texas.  What remains is a legacy of cavalier spending, budget busting policies, and a shredded Constitution.  This economic and moral morass leaves the rest of us to figure out how to manage our investments and keep our lives together.

After listening to Henry Paulson yesterday, and several times over the past weeks, I’ve come to the conclusion he too has no clue what to do.  To think that he is in charge of dispersing 700 billion dollars is frightening.  Confidence in this kind of “leadership” is zip - zero, and the daily market decline is a record of how investors are voting.

I join the vast majority of Americans who feel we will be better off in four years.  Actually, we will be better off in 68 days, but no pollster is asking that question.

Since we cannot “check out” as the president has done, what is the plan going forward.

Suggestions for moving forward

• Slowly add to investments on market declines.  Pay attention to the moving averages on StockCharts. If you are not comfortable investing in a falling market, wait for the 26-Day EMA to move from below to above the 52-Day EMA.  You may even want to increase the number of days for these EMAs.
• Check on your asset classes to see if they are in balance. Rebalance if necessary.
• This is gut check time to see if you have the proper asset allocation plan.  Review the allocation percentages if there is discomfort with the current plan.
• Great patience is required in these difficult times. Remember 1929-1945 and 1969-1982?  We may well be in for another market drought.
• Consider dividend generating investments.
• Discipline yourself to save regularly, even though it seems like the end of the world is close at hand.  It isn’t.
• I expect purchases over the next year will pay off handsomely in ten years.

Photograph: Sculpture in Budapest, Hungary.  The photograph reflects how U.S. investors are feeling in this bear market.