Just a Note to Inform You That I will be in Denver for two weeks starting tomorrow. I look forward to meeting with several of my clients. Writing on this blog has been somewhat sparse lately. I have had numerous visits from friends and family. My writing has been secondary to enjoying those visits. Those who wish to meet during the next two weeks can call Susan to arrange a time. The number is 720 449-0200. One other thing I would like to call your attention to is that I will be filling in on Real Money, a radio show with my old friend and colleague, Ray Benton. The time is 12 noon this coming Saturday at 1600 on your radio dial. Listen if you can and feel free to call with questions if you have any.
The Tide Has Been Rising. Remember the old adage that "A rising tide lifts all boats." This has been true of our stock market lately. It has been hard not to make money in this market. Even if you did a poor job of stock selection, chances are the rising market made you look good. I must say the same thing goes for our money management clients. I would like to claim it is our brilliance that produced this result but I call your attention to another adage: "It is only when the tide goes out that we find out who has been swimming naked." In other words, we may not be as brilliant as we think we are when the inevitable correction takes place. Its time to ask ourselves whether our gains are real or illusionary. The answer is we don't really know. When we buy a stock, we buy into a business. If the price doubles the next day, has the value of that business really doubled? I say that it hasn't. It is the investors' perception of the value that has doubled. That perception could change tomorrow and all those gains could disappear. In other words, you don't reap the benefits of the market's perception of the value increase unless you sell. Before you run out and liquidate all your investments, remember that the market perception of value could, and often does, continue to increase. This is why we usually recommend that our clients construct investment portfolios that emphasize cash flow. It is only that cash that we find in our hands which we can use for funding our lifestyle. I almost never recommend selling a company just because the price has gone up or down. It is only when my perception of the company's prospects has changed that I recommend selling and I fully admit that my perception could be incorrect. The best recommendation I can offer at this time is to look at stocks in your portfolio and ask yourself if your opinion of the company's prospects have changed. If so it may be time to take some or all of your money from that investment.
The Tide Has Gone Out In The Real Estate Market. Some folks have been caught swimming naked and face foreclosure or even bankruptcy. This Saturday, I will be talking about the Denver real estate market on the radio show. I am analyzing some of the market statistics in order to decide whether or not this is a good time to re-inter that market. My next post will contain some of these observations and our conclusions.
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