Dear Clients,

I recently had the privilege of going to Boston for an investment conference. I’ve been going to such conferences for years. Normally, the audience is fortunate to listen to some very good money managers. These forums are also great places to talk to other financial planners. This one was no different. What was different this time is that this was the first investment forum I’ve attended since the financial collapse of last fall. David Gergen was the featured speaker. With his many years of service in the executive branch of government he lent an air of credibility to the political discussion in the room.

Actually, I did attend a conference in Florida at the beginning of the year, but we were still in the middle of the crisis so I don’t count that one. The Obama administration hadn’t yet been sworn in; we didn’t know who the key players were going to be, so the system fixes were not set into motion. But now we are seven months beyond the collapse. We’ve gained some prospective and I’m beginning to draw some conclusions:

* We are truly in uncharted waters, economically speaking. Government intervention in the private sector has never been so large. Nobody in positions of power has ever experienced back to back quarters of such contraction. They are literally feeling their way through this; there is no blueprint to follow.

* Government intervention was necessary to save us from complete collapse; otherwise we could have gone to our ATM machines and our debit cards may not have worked.

* It was also lack of government regulation that caused this. Nobody in government saw the potential devastation in the repackaging and worldwide distribution of sub-prime loans, but they weren’t looking either.

* Full economic recovery may be three to four years away and the shape of that recovery is a matter of intense debate. Government deficits will be huge for years. Will we have runaway inflation like the late 70s; or will we, as a nation, default under all the weight of debt? Taxes, one would think, must surely go up but with the government being so heavily involved are we heading toward a more socialist, less capitalistic society?

I always like to reflect and look for take-aways that will help me be a better financial planner, or investment advisor; something actionable. Those concrete, actionable items will be the subject of a future release. But for now, be flexible to your investment approach. The next few years should be fascinating to watch.

Take care,

C. Cameron Bell, MAS, CFP
Executive Director