2011
Sep 
3

This Week (9-1-11) Peak Performance Coaching Report and Current Economic Outlook

Filed under: GENERAL — Kerry Johnson @ 4:11 pm  

This Week’s Peak Performance Coaching Report
and Current Economic Outlook
As you communicate with your clients and help them make sense of the current economic conditions, here are some talking points that will make your conversations more relevant and informed.

Have you missed any Dr. Kerry Johnson Client Updates? You will now be able to respond to these market updates, and add your own expertise as well. Just visit http://www.kerryjohnson.com/blog to make your views known. Be sure not to miss Travis Terlau’s techniques on how he up-sells financial planning clients to life insurance. This audio interview alone will increase your business this year.

Here are some concepts you should keep in mind this week as you make your 3 month client calls:

Volatility In the Stock Market
According to a Bespoke Investment Group, there have been 283 swings in the market of at least 4% since 1900. 10.95% of those have come since October 2007. Over the past century, secular long-term trends has been very predictable. After the 1929 crash and the Great Depression, the market took 25 years until 1954 to return to new heights. The market rally beginning in 2009, seems to be running out of steam. Only the 1932-33 and be 1935-37 runs saw stronger rallies than 2009 over a two year period.

Recently the Fed decreased GDP for 2011 to less than 2%. This week the U.S. Treasury predicted unemployment would be 9.1% through 2011 and down to 9% through the 2012 election. No president has ever been reelected with unemployment above 8% since FDR. Besides a debt ceiling controversy, other factors have contributed to a soft patch recently in the US economy. Among those is the sovereign debt crisis in Europe that has of late, threatened the health of the European banking system and spillover to the US economy. Currently US exports to Europe are so high that it is responsible for 20% of our GDP. Our financial systems are connected through interbank lending and the funding of our capital markets. It is often said that when the US has a cough, the rest the world gets a cold. Consequently, when Europe gets a cold the US gets a cough.

The Politics of Doom and Gloom
Congressman & presidential candidate Ron Paul has campaigned for years about the lax money policies of the Fed, overspending by the treasury, and the ravages of inflation. But very few have reported where Ron Paul has his money. According to financial disclosures, Paul is a heavy investor in gold-mining stocks and has been for the last 16 years. This backs up his belief that inflation will be so severe in the future that Americans will abandon the dollar and move into commodities like silver and gold for hard money. In 2010, Paul had between $1.6 million and $3.5 million in gold-mining stocks in addition to holdings in three bear market funds. These financial positions have been constant since 1971, but it looks as though his investment strategy may be finally paying off.

A Slowing Economy
For those who ask whether the US slowing economy is headed toward double dip recession, all one needs to look at are corporate earnings. According to the ISI group, US companies that sell to emerging market countries are seeing high profit. While many US companies are sitting on more than $2 trillion of earnings currently, many are waiting to start hiring when they see more predictability in regulations and a reformed corporate tax system. Until that time, unemployment is likely to stay high.

Waren Buffett Wants to Raise Your Taxes
Buffett made the news recently about millionaires paying too little taxes. But this tax increase would make a very small dent in the federal debt. The congressional budget office, CBO, estimates that federal debt will increase from 69% of GDP to 101% in 10 years. This means to maintain a 10 year goal of 69% debt to GDP ratio, spending would have to be cut or revenue raised by nearly $7.6 trillion over the next 10 years. Buffet’s proposal would only race 500 billion in extra revenue over the next 10 years.

Kerry

3 Comments »

1

Like the blog

Inch @ January 29, 2012 7:44 pm

2

Madalyn Lu…

Very good blog post.Thanks Again. Really Great….

Trackback by Madalyn Lu @ February 10, 2012 5:30 am

3

Charlotte Schleicher…

Thank you for your blog.Much thanks again. Awesome….

Trackback by Charlotte Schleicher @ February 26, 2012 8:57 pm

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