To Benefit From The Knowledge Of Historical Trends.

There is a firm belief that the following is happening (or will happen) in connection with the current economic stimuli being applied to the global economy. I feel it is necessary to look into what the real effects of this stimulus are, without speculation or political suggestion driving ones conclusions:

1. Central banks worldwide are flooding the global economy with liquidity to stave off deflation and stimulate economic activity. This is particularly true of the United States, which is central to the global economy.

2. This monetary policy will result in a significant increase of M2 (typically viewed as the total currency in circulation, deposits and money market instruments or other cash equivalents), which will debase currencies, but in particular the U.S. dollar.

3. The price of gold will increase, anticipating the effect of the M2 increase and inflation.

4. The price of energy will increase, being an essential input of an inflating economy.

5. A more broad-based economic recovery will then begin resulting in a rise in share prices world-wide.

6. Insurance companies, which are more levered to the stock market (compared with banks)as a result of, among other things providing guaranteed returns on variable annuity products, will benefit next as their capital position backing those policies grows in connection with rising share prices.

7. Credit conditions will improve, lifting the prospects of banks globally.

*Current actions taken by governments around the world are designed to create an inflationary effect in the global economy, stimulating economic output and consumer spending.

*Historically, industrial output contraction has been followed by significant output increases which have driven economic growth and market returns.

Asset Allocation Designed To Benefit From An Economic Recovery:
Certain sectors and companies will benefit earlier and more substantially than others in the event of a market recovery. And it's within these names that you will find the greatest value and successes in rebuilding your portfolio holdings over the next 5 years and beyond. Once again, tactical, active management is needed now more than ever before.

(Due to licensing constraints, I will not be listing the individual names of companies I am following, but send me an email if you would like to hear more.)

Regards.