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• January 28th 2009 





2009 Already?

May you live in interesting times....

I got off to a late start this year with the e-newsletter as the month of January has flown by. But not to fear we are still up and running. This month I have compiled some random tips for the year along with some commentary to let you consider. So let's get rolling:

Seniors (those age 65 and up!) this is for you:

As mentioned in last months newsletter Congress has officially suspended the 2009 RMD's. This means that if you are age 70 1/2 or the beneficiary of an IRA and were subjected to the minimum distribution rules you can take a year off.

Also of note is that the Social Security administration has caught up to the 21st century. You can now apply for SS benefits via your computer instead of spending half a day visiting the local SS office. Go to www.socialsecurity.gov for more info.

Recession or Depression?:

That caught your attention didn't it? The question is are we in a really nasty recession or will economists tell us years from now that we just lived through a once in a lifetime depression? I'll define the two below, but before you go and get all depressed let's take a look at it since we are currently living it. The fact is life goes on, businesses are created and new industries/technologies are developed in both recessionary and depressionary economic times. And the simple fact is that this to shall pass, it just takes time and a little belt tightening. (How bad is it really when people are still buying their Blackberry's and Nintendo Wii's?)

Recession: when a nations living standards drop and prices increase. The downturn is defined as a decline in a nations GDP for 2 consecutive quarters.

Depression: massive decrease in business activity, falling prices, reduced purchasing power, excess supply over demand, rising unemployment and other negative economic factors.

So, What's that mean for my investments?:

In the face of such bad economic news there is no way the market could actually go up, correct? This is a tough call, but in actuality the market has discounted much of what we are currently going through. A stock price is simply the value placed on a future stream of a companies earnings. So if over the next 10 years the market sees growth then yes the market could begin to recover this year.

From all indications the markets are setting up for a decent size move. Just not sure which way it will be at this point. If we follow the script from the 70's then the upside may surprise you. If we follow the script from the recession of early 2000's then we unfortunately have one more leg down.

With the massive amount of stimulus fixing to be unleashed along with rumblings of a "bad bank" to take all the toxic assets from banks, the momentum may be on the upside. Couple this with a pattern shaping up in the dollar index which projects the value of the dollar to move down (my interpretation) then asset classes should get a boost (stocks, bonds, commodities). At least that is the gut feeling at this point. This is by no means the all clear for an immediate recovery as this market is known to change on any news out of Washington or the Fed.

About the time many of you recieve this we will be finding out from our Central Bankers what their next course of action will be. Hopefully they haven't used up all their bullets and have something creative in the works.

Parting thoughts:

Lastly, although it isn't fun to go through this mess once we do get to the other side the next wave of global expansion should be a doozy of a bull market!



James A. Daniel,
CFP®

This newsletter if for informational purposes only. The information contained within should not be considered as financial advice nor soliciation for financial services. Consult with your financial professional if you have any questions.

The Advisory Firm, LLC is a fee-only financial planning company and registered investment advisor.


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