Financial Wisdom

“TO BET ON A PROLONGED SLUMP IS TO BET AGAINST THE GOVERNMENT, MARKETS, AND HUMAN NATURE.”
~James Finucane

Barron’s Magazine writer Jonathan Laing recently profiled 67 year old analyst James Finucane, who has been great at calling stock market lows, including the low reached after the October 1987 crash. He has observed that every major financial crises has created spectacular buying opportunities, especially when crises of the past reached crescendos. To him, the government sponsored bailout of Bear Sterns was a crescendo event. The financial panics of 9-11-2001, 1998 collapse of Long Term Capital Management hedge fund, and the 1994 Mexican peso devaluation were similar in magnitude.During these crescendo events, many investors panicked and sold out fearing further declines. After government and central bank intervention, the markets moved sharply higher. Buying high and selling low is a hallmark of investor behavior. It provides educated, unemotional participants terrific profits over time.

“ANYONE WHO BELIEVES EXPONENTIAL GROWTH CAN GO FOREVER IN A FINITE WORLD IS EITHER A MADMAN OR AN ECONOMIST”
~Kenneth Boulding, Oxford educated economist

Consumer confidence is at a 17 year low, housing and retail are still slumping, and investors are fearful. Money market cash has soared to approximately $3.5 trillion dollars, versus $2.2 trillion at the market lows of 2003. Interest rates are lower than the rate of inflation, which suggests that governments and the Federal Reserve member banks have a clear incentive to promote growth. Money always goes where it’s treated best, and right now many of the world’s greatest businesses are on sale. We agree with Finucane’s analysis. The fuse for an explosive rally has been lit.
Buy the bargains now before the market takes off.

Read the whole issue here:
http://www.fallenangelsreport.com/email/060508/income-fund.htm

Disclaimer
The opinions expressed are those of Gabriel Wisdom and Michael Moore and do not necessarily reflect the opinions of American Money Management, LLC (AMM), an SEC registered investment advisor who serves as portfolio manager to private accounts as well as to mutual funds. Clients of AMM, Mr. Wisdom, Mr. Moore, employees of AMM, and mutual funds AMM manages may buy or sell investments mentioned without prior notice. This newsletter should not be considered investment advice. The opinions expressed do not constitute a recommendation to buy or sell securities. Investing involves risks, and you should consult your own investment advisor, attorney, or accountant before investing in anything. Current stock quotes are obtained at http://finance.yahoo.com. Prices are as of the close of the market on the previous day of trading.

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