Regarding stock investing, we hear the mantra from various pundits that the long-term buy and hold strategy is over and that a shorter-term trading strategy is imperative for future investment success. During times of turmoil such as the current financial upheaval in the credit markets which has brought about a deep bear-market in stock prices and asset prices overall, it is difficult to separate information from misinformation. We encourage investors to ignore much of the luring by the trade-promoting pack. In fact, it could be argued that applying a buy and hold investment strategy is most applicable precisely when markets have been through turmoil such as we have recently witnessed. Investors should be mindful that the building of wealth does not come about through speculation, except for relatively few fortunate individuals. The surest course to protecting ones’ capital and maintaining ones’ standard-of-living and purchasing power over the longer-term is investment diversification with a mix of stocks, bonds, and precious metals. Cash also provides a temporary means of savings in order to take advantage of investment opportunities when they arise. Additionally, antiques, artworks, real estate, and the like can be useful as savings vehicles, although they are typically less liquid than other assets. The surest course is quite often never a straight line. There exists no reliable method to predict, with any degree of accuracy, where asset prices will be tomorrow, next week, or next year; too many fluid variables exist. Allocation within the investment mix, however, provides the means to ride out the inevitable market cycles from peaks and troughs in order to accumulate wealth that can stand the test of time.

Another important element to building wealth, while alleviating the stress of the inevitable ups and downs in the stock market, is having an investment plan based on a sound outlook of the economic and monetary environment. With the exception of a “day-trading tactic”, an investment strategy almost always necessitates a longer-term perspective. Without a longer-term, buy and hold strategy, most investors will be set up to be whip-sawed by the market movers (such as pension, hedge, and mutual funds) due to the speed and sheer volume of the trades.

President Barack Obama took the oath of office becoming this country’s 44th President and offered a well-crafted and notable speech. This country’s hopes (and perhaps much of the world’s) are being placed squarely on the shoulders of this historic presidency. It is our belief that President Obama will be largely successful in better leveling the playing field from Wall Street to Main Street, and this bodes well for the nation in the long run. However, problems within the financial sector will continue to plague stock market investors near-term until non-performing assets are extracted from the balance sheets of our major banking institutions and housing prices decline to reasonable and attractive levels. Similar to the savings-and-loan crisis roughly two decades ago, it may be necessary to nationalize the banking system for a period of time. After all, the banking sector, for all intent and purposes, has already been moving toward nationalization with more than three hundred out of an estimated eight thousand U.S. banks handing over corporate shares and other securities to the U.S. Treasury in order to participate in the Treasury’s Troubled Asset Relief Program (TARP).

More clarity is needed from the new Administration as to how the credit crisis will be resolved. The solutions offered to date have not been novel or bold, although you wouldn’t get that impression by watching CNBC or other news channels for that matter. The problems facing this country and other countries around the globe are real and getting worse. It is not so much a lack of confidence as it is a loss of confidence, and for good reason. Solutions so far to the housing problem and, more broadly, the global credit crisis have amounted to nothing more than throwing money at the problem and hoping that the U.S. consumer will be duped into further over-extending his/her self. This will not work. Any workable solution will need to be bold. In our opinion, the time has come for massive reductions in government spending, reducing the tax burdens on citizens, lessening the burden of entry into business for enterprising people, eliminating wasteful corporate subsidies, require corporations to share in their gains with the communities in which they operate, and support (strengthen) the U.S. dollar against all other currencies, among other things. In total, the non-productive areas of the economy have got to stop depleting the productive sectors, if we are to emerge wiser and stronger from our financial-borne ills. If we should have learned anything from the business cycles of the 20th century, it should have been how not to let the bankers world bring down the real world. Fiat currencies corrupt its leaders and pillage the masses. Gold, on the other hand, is no ones’ debt.

It remains our opinion that security markets will find it nearly impossible to gain footing until the financial sector comes to grips with its over-indulgences of the past. Apart from the banking and credit crises that now face developed and developing economies around the globe, rising unemployment and under-employment (due largely to perpetual credit contraction) will be an over-hang to sustainable economic recovery in the months and, perhaps, years ahead. In this regard, investing in securities during 2009 should be made with rigorous attention to corporate health and sustainability and always with an eye toward the preservation of capital.