The Future's So Bright...

We're in the midst of unprecedented changes in our financial system. How will it all play out? Impossible to say in the short run.

First, the U.S. government is injecting a massive amount of money into the global financial system to stem the credit crisis. This should provide major support for stocks (although gloomy investor sentiment currently clouds this historically evident conculusion). That's a net positive. This federal intervention, while absolutely necessary, eventually will prove highly inflationary because the money will be created by more borrowing. This will increase the supply of dollars, so each dollar will be worth even less than it is now. This will make investments that beat inflation even more important over the next several years. Third, the huge asset sale by overleveraged financial institutions is gradually running its course but isn't over yet. This is a negative for financial assets now, but the result will be tremendous investment values for the companies that are buying these "good" assets for pennies on the dollar.

We've previously recommended, and continue to do so, that you keep the majority of your investment portfolios in a safer position. But you may want to consider taking advantage, modestly and gradually, of opportunities for higher income and low-risk growth. These types of investments include alternative investments that have been purchasing the ultra high-quality assets from the cash strapped banks for extremely favorable prices. The great thing about the alternative investments is that they are not volatile, provide a return you can spend (cash dividend) or reinvest, and are usually fully secured by the real properties they own.

If you want to beat the recent 10 year stock market averages, you should look into your alternatives to the stock and bond markets. The world's smartest and most conservative institutions have been using alternatives for years. Do your homework... you'll thank me later.