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Goldata Financial
Dedicated to above average returns in the stock market.
STOCK MARKET COMMENTARY
January 4, 2010
From Elliot
Goldberg, Registered Investment Advisor, Goldata
Financial
Last week, the previous week’s zig to the upside was followed by this past week’s zag down. News was in short supply but nonetheless tilted
toward the positive as jobless claims continued to improve. This time of
year, especially at the end of a decade, provides time for both reflections
and predictions. Looking backward, this decade has seen its share of
challenges (9/11, the NASDAQ and credit bubble bursts) and it’s easy to
get lost in the shorter-term challenges of the present. More important to
equity investors are the longer-term issues. Here we have two unmistakable
advantages for the long-term bulls--- the continued acceleration of
productivity through technology ( i.e. Internet, Blackberry)
and America’s entrepreneurial bend which allows capital to easily form
in an attempt to provide solutions to problems. While government will always
be important in setting the rules and enforcing them, a stable set of rules
allows entrepreneurs to access risk and allocate capital in the most
efficient way. My long-term bullish view leads me to the following
predictions for the next decade. First, the next decade will be the decade of
choosing … choosing how much to allocate to health care, war, and education
as lenders will be reluctant to continue to lend us the sums of money required
to fund everything. This will start as other countries with a head-start
towards overwhelming debt (Greece, Japan) are required to scale back
(requiring choice) if they continue to want borrowers to lend to them. This
forced choosing will be a positive thing as lenders around the world will “Just
Say No”, providing cover to our elected officials to start to make
choices instead of believing that we have an endless pot of money to spend.
While there will be attempts by influential entities to sway government, the
electorate’s self-interest will require it to become involved(as it
will be their allocation that is being taken) and keep this waste to a
minimum. As “necessity is the mother of invention”, a new set of
“efficiency businesses” will be spawned as entrepreneurs will
find it worthwhile to “invent” ways to reduce costs. A major
beneficiary of this will be our health care as the debate changes to
“What potential cures do we invest in today so that we don’t have
to pay for services and medicines in the future?” Politicians who
“get this” early on will find an enthusiastic electorate, who see
that in a world of choice, those increasing the choices most help them.
Another prediction --- states and cities will be forced to scale down as the
increased frequency of bankruptcy will make lenders less likely to lend to
them. My last prediction concerns taxes where government will continue to
turn to gambling as the elixir to their problems. This will help but some
sort of Federal consumption tax (or VAT) will be instituted as taxpayers will
not stand for additional taxes on their income. To those of you who have entrusted me
to invest a portion of your assets, I thank you again. To all, there will be
the inevitable ups and downs, but I believe we will all share a brighter
future together.
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