THINGS I'VE LEARNED.

From My Dad. It's Father's Day. All the kids and grandkids have either been over here or called me. I received numerous cards, most quite humorous. I am lucky to have such a devoted family, more important to me now than ever as I approach my 70th birthday in a few months. But the main thing that comes into my mind on this day is my own father and the things he taught me. There is no legacy of material goods that can compare with the value of the things he taught me.

1. When You Make a Mistake, Admit It And Do What You Can to Correct It ASAP.
Before I was born, my mom and dad moved to Kentucky so my mom could be with her mother when I was born. My Dad found himself working in the dark misery of a coal mine. Kentucky was rainy and damp and there was little work to be had besides in the coal mines. When I was six weeks old, they made their way back to Colorado where our entire family was better off.

2. There Is Always A Way. Until I was seven years old, we lived in a series of run-down rental properties. Every thing from converted barns to tool sheds. Mom and Dad had no money to buy a home and not enough income to make mortgage payments. When the Mile High Poultry Farm closed down, the company practically gave away their old chicken coops to anyone who would tear them down. Dad acquired several of them and tore them apart piece by piece. We then removed the nails and used the lumber to build the house I grew up in. I followed him around from start to finish. I had a little crow bar (which I still have) and I did what little I could to help. My mother and I removed nails and stacked lumber while Dad worked on the house. That was almost 60 years ago and the house is still being lived in today.

3. How Much You Earn Is Not Important. My Dad became financially independent on very little income. I still can't figure out how he did it. He was frugal but not stingy. He knew the world didn't owe him anything and he went out and worked for everything he got.

4. Being Poor Is a State Of Mind. When I was 12 years old, I used to cross the road in front of our house and lay in the cool green grass under the apple trees. In the fall there were apples every where and I ate all I could but most of them rotted on the ground. One day I got this great idea and I ran home to tell my Mom we should pick up all those apples and give them to poor people. Mom's reply was "Son, we are poor people." Nobody ever told me. There was always an attitude of "we'll get what ever we need." And we did.

5. Teach Your Children to Take Care of Themselves. I have many clients who sacrifice much of their wealth to care for children who are old enough to take care of themselves. I don't know how he taught me this, but from the age of 13, my pride wouldn't let me to ask my Dad for money. I saw how hard he worked for what we had. I knew I was expected to do the same thing. I did my best to earn my keep. I wasn't always able to do this but I never stopped trying.

I guess this is about the best I can do to pay tribute to my Father on this day. In case you think I am referring to a memory, let me tell you the best part. As I approach my 70th birthday, my father is still here. Not just in spirit but in the flesh. He doesn't walk quite as fast and he gets out of his chair slowly but he is still teaching me. He is showing me how to grow old with dignity and pride. As my brother says, "He'll live to throw dirt on both of us." I hope he does.

AWASH IN LIQUIDITY??

Many Experienced Market Analysts Attribute Recent Market Rises to Liquidity. There are many investors with capital that they are looking to deploy. It has to go somewhere and there are risks everywhere. I recently had someone re-state the "Awash in liquidity" statement to "Awash in stupidity." Investors have been willing to pay more and more for a dollar of stock market earnings or net operating income from real estate. All this appears to be nearing the point where it is becoming extremely difficult to find a worthwhile investment. The stock market appears to have entered a period of pessimism with the Dow dropping in excess of 300 points over the past 3 days. Residential real estate is falling nationwide, including Denver where virtually all the condo/townhouse prices are lower, some drastically. The same is true of single-family properties in certain areas. So what is a good strategy to follow in this market?

Cash is Important. If you have followed our advice of the past 4-5 years and acquired investments that produce cash flow, don't be in a big hurry to reinvest that cash. Get the best yield you can on a money market account by shopping among banks and mutual fund companies. You should be able to get 4-5%. Your main risk is that you will be out of the market when it rises but the downside risk is more than the upside potential at this point.

Buy Stocks Selectively. Look for value when you invest in the market. It doesn't appear that index funds based on the broad market will do as well as carefully placed funds. Certain sectors such as energy, oil service stocks, and refiners still appear to be attractively priced considering the world-wide demand. Business development companies appear to offer attractive dividends at current prices. Certain bank stocks pay decent, tax advantaged dividends with reasonable expectations for price stability. The main principle here is don't bet the farm on any sector. Things could get worse.

Cut Back in Some Areas. If you invested in real estate investment trusts when we were recommending them in the late 90's, you received attractive dividends along with considerable price appreciation. Now is the time to take a look at cutting back. Some of these are paying dividends of 6% based on current prices. These are not tax advantaged and the premium over lower risk investments is not high enough to justify a major commitment to this sector.

Don't Be In a Big Hurry to Unload Your Real Estate. If you have well-located real estate, don't be in a big hurry to sell into this market. The number of properties being offered for sale is beginning to decline which is always an early sign of a market recovery. The Denver economy is growing stronger and residential vacancy rates are down from two years ago. We may be nearing the point where we can see moderate rent increases. That said, it may still be worthwhile to take advantage of sale opportunities, particularly in areas where prospects for future appreciation are limited. In any event, your cash flow from real estate will likely increase over the next few years. It may even be a good time to buy selectively in areas of higher rent demand. If you do have to sell a property, a good strategy is to make sure it is in top condition. The market will always pay for quality.

Take Every Thing You've Read Here With a Grain of Salt. Remember, what I am offering you is an overall strategy, any aspect of which may prove to be wrong at a later date, requiring a change in our outlook. No one, is capable of accurately predicting the direction of the markets with a high degree of certainty. We can only set a strategy and be ready to correct it if conditions change.

We Plan to be Back In Colorado Soon. Sitting in my air conditioned office looking out at the lush, green woods is gratifying. There is a magnolia tree with a 12-inch white blossom about eye level. That's the good news. The bad news is that you can drown in your own perspiration if you spend an hour outside working in the heat and humidity. Its time to get back to Colorado. Hopefully, I can spend some time with those of you I didn't get to visit on my last trip.