October 14, 2001

    Everyone has been asking me, so when is the market going up?  And no matter what I say always note that opinions are found by the cent.  However, to answer this question we have to look at the in a broken down, but general  fashion and answer it as quick and concise as possible.

    First, note where we have been.  We had a enormous shifts of money from other sectors of the economy and into a new technology industry.  Where upon many lost and other made a lot of money. 

    Second step aside and note where we are.  Look at what all the media, and what they have been covering and you know what is most important for the many different market we have out there (War News, Political, Safety Concerns, Economy).  While the economy seems to be of last concern now it should return back to the first concern within a period of time (6 months - 1 year) 

    While the federal reserve and our government is more responsive to the peoples concerns.  People are realizing that economically, not all of us are doing so we'll.  Look at the consumer confidence index, and unemployment rates these factors and other seem to indicate that not all of the economy has been doing great for quite a while.  The attack on September 11, 2001 made this more evident and hastened the downfall on most of the financial markets.

    I expect, October to be normally a low month for most years. The end of November shows us how good the financial market will be doing for that year and the beginning of next year, I don't expect much from November either.  However, you should not wait for the end of December the financial market can begin to have a turn or keep on flat for the rest of the year. 

    Portfolios for my age group(31 years of age) with my type of risk tolerance (medium, out of three grades) should start going to a 65% stock position for the month of October.  In November at least 70% stock position for your portfolio.  By the mid January possibly 80% stock position. Remember, even though I have not mentioned any thing about diversification or asset allocation they are both important. The remaining percentage should be in liquid cash funds.

   To get in on the capital gains for most of these stocks, you should buy when the prices are low not when the financial markets are turning.  How long should you wait till the markets begin to go back up?  well it can be a long time about 1-3 years possibly.  However, that is why you have some asset allocation to solid blue chip companies. 

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I basically covered everything till December 2001.  What do I expect for the rest of the year (2002)?  Nothing,  and possibly a more of a flat to bearish market.  You may then be asking why?  1) I do not expect the fed to cut rates at all, they could but then it would have to face some consequences.  2) What about these high P/E ratios?  Well, they can help us or hurt us if these securities 

The new Act provides for an increase in Traditional and Roth IRA-

Education IRA's limit expands from $500 to $2,000 effective in 2002 (but there are income limits for wealthier taxpayers). Withdrawals are tax free but must be used for school expenses. The Act now allows for withdrawals  for K-12 expenses, including tuition for private schools, parochial schools and college.

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