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HELP!! I THINK I AM BACK IN THE 1970'S.

July 12, 2008 – Comments (0) | RELATED TICKERS: MRK , PFE , TRMS

It's been a while since my last blog, and it feels like a time machine transported me back to the 70's. Pain at the gas pump, rising food costs, and rising unemployment; these things all happened in the 70's. Although it seems like the 70's & some people are saying that the investing strategies used back then could work now, I do not think it is wise to fall in this trap. There are significant differences between now & then including: inflation is rising, but compared to the 70's it is not so bad. In the late 70's & early 80's the prime rate was about 15% or 16%. The U.S. is still the leading consumer of oil, but the use of other energy sources has decreased our consumption of oil as a percentage of all sources of energy. New sources of energy, such as natural gas, will ease our oil demand. Other key differences include the fact that housing prices are now declining instead of rising, worker's wages are not increasing, unemployment is not nearly as high now, globalization helps keep consumer goods lower and increases the profits of U.S. companies selling goods abroad, and there has been a technological revolution since the 70's. Even though I think the 70's were a lot worse than now, I am fully aware that these are hard times. Right now raising cash and protecting your hard earned capital is of the utmost importance. Here are my strategies for the real portfolios that I manage: 90% of my portfolios are in cash; I have value stocks with high dividends, like MRK, PFE, PM & CSA. Gold is a good hedge, and I own KGC. I have some foreign exposure with NTDOY & VIV. I have one speculative play in biotechnology, TRMS. A few caveats for full disclosure: I am not a professional money manager as the portfolios that I run belong to family members & my own accounts; I leave my employer-sponsored retirement accounts alone; and this is not a recommendation to buy or sell any of the stocks that I mentioned in this blog. Although it has been rough lately, I tell myself that this too shall pass, and when the economy and the stock market improve, then I will still have plenty of capital to invest in the stock market. Good luck to all CAPS members!!