Investors Wait for More than "Green Shoots"

The positive momentum in the stock market that began in early March has certainly slowed down.  Investors went back into stocks in the hope that the economy was soon to be on the mend.  But they're now waiting for a clear indication of better times ahead before putting more money in stocks.  The most reliable indicator of a truly recovering economy will be improved corporate profits, and the second quarter reports will start coming out in early July.  However, corporate profits aren't expected to be very encouraging.

Stocks were mixed last week, as were economic reports.  Some reports suggested that the worldwide economy is in even worse shape than most have reported.  On the other hand, consumer confidence continues to be improving, although consumers seem more inclined to save money now than spend it.  That's certainly all right by me, although the economy could certainly benefit from more spending.

What to Look for in the Second Half of 2009

The latter six months of 2009 will probably provide a much clearer idea of whether the economy is poised to reverse its downward spiral or, as some economists are forecasting, if the malaise is expected to continue well into 2010.  But investors should keep in mind that the stock markets don't rise or fall in lockstep with the economy.  A case in point:  stocks have risen almost 40 percent in less than four months while the economic outlook has not improved by much, if at all.  So investors who are waiting for clear signs of economic improvement, not just smoke signals, to deploy their money could miss out. 

As far as bonds are concerned, investors should keep an eye out for trends in interest rates.  There is going to so much borrowing by the federal government to fund the huge stimulus and existing deficits and state governments to pay for their budget shortfalls that higher interest rates are a distinct possibility.  That will hurt bond prices, but for those with money on the sidelines, higher interest rates may make investing in bonds and bond mutual funds more profitable.

Smart Money Tips

• Store unused valuables in a safe deposit box.  If you have some valuable jewelry or other baubles that you don't use very often, if at all, store them in a safe deposit box.  They're safer there and they're a lot cheaper to insure.  And yes, you should insure any valuables that you keep in a safe deposit box, because the bank doesn't provide insurance coverage.

• Don't be discouraged by the retirement pessimists.  The media and the financial services industry have managed to scare the daylights out of most working age people about our dismal retirement prospects.  Don't let them get you down.  The truth is that the Great Recession has hurt most of us, but not to the point that we have to contemplate working forever.  Sure, we may have to change some of our spending and investment habits to improve our finances, but your situation is almost certainly far from hopeless.

Food for Thought

We are not interested in the possibilities of defeat.

-Victoria, Queen of England

Money Can Be Funny

I have enough money to last me the rest of my life, unless I buy something.

-Jackie Mason

The Great Recession has forced all investors into uncharted waters.  While the recent gains in stocks have been encouraging, investors are still concerned about how their investments will fare amidst the worldwide financial crisis.  If you are concerned about the guidance you have been receiving or your own ability to invest sensibly, it may be time to consider an experienced investment manager who understands the importance of prudent investing.

onathan D Pond, LLC is a fee-only, SEC-registered investment advisor.  For over two decades, Jonathan has been helping individuals and families throughout the U.S. with the management of their investments.  He provides customized solutions for a diverse clientele.  Each client account is different, reflecting each client's unique financial and personal circumstances.  He takes pride in avoiding the crowd mentality that has been so harmful to investors.

If you have investments of $500,000 or more and would like to consider Jonathan Pond for experienced management of your investments:

Visit:  www.jonathanpondllc.com.

Email:  jonathan@jonathanpondllc.com

Call:  (617) 243-0020