Financial Conservation

"The post-op on the great crash of 2008 continued in Washington Thursday as the Joint Economic Committee (JEC) held a hearing on financial reform.

'Unfortunately, the regulatory regime that failed so terribly leading up to the financial crisis is precisely the regulatory regime we have today,' Treasury Secretary Geithner declared. 'We need comprehensive financial reform.'

There is a way to have a financial system with a 'reasonable degree of stability' and 'serves a public purpose,' Galbraith says. 'But it does require having a government which is not run by the financial sector.'

Galbraith didn't use the term 'Government Sachs,' but said 'we're not going to get where we need to get...if you have this revolving door where all the people from Wall Street go down to Washington and offer their services and basically serve their own worldview and the financial interests of their friends.'"

MED Comment: Arsonist or Firefighter?  You can't be both at the same time.

http://finance.yahoo.com/tech-ticker/article/375918/%22A-Govt.-Not-Run-by-the-Financial-Sector%22-James-Galbraith's-Rx-for-Wall-Street-Reform?tickers=XLF,FAS,FAZ,GS,MS,JPM,C

www.financialconservation.com

Bear

Robert Prechter, founder of Elliott Wave International and author of Conquer the Crash, is on the other end of the spectrum cautioning retail investors to "stay away... for now." He was bullish near the lows in March, but now says the stock market "is in a topping area." Mr. Prechter compares the current market to those of 1966-74 or 1929-32, where massive bear rallies gave way to another "big leg down", i.e., a W-shaped recovery.

Mr. Prechter is predicting another crash in 2010 that will bring stocks below this year's lows. His word to the wise, "be patient, don't rush it" keep your money in cash and cash equivalents for now and wait out this bear market. His analysis further indicates 5 or more years before we turn the corner into real bull territory and "it'll be the buying opportunity of a lifetime."

http://finance.yahoo.com/tech-ticker/article/367008/Bob-Prechter-Bear-Market-Rally-Is-Over-Stocks-Headed-For-New-Lows?tickers=spy,qqqq,dia,%5Egspc,%5Edji,uup,udn

Ms. Sonders and Mr. Prechter are professionals who have both made, through extensive research and study of the same market history, reasonable sounding arguments for their diametrically opposing views. They represent armies of experts on both sides of the ongoing bull vs. bear debate.  Whether the market as a reflection of the underlying economy will experience a W, V, U, "Square Root" or whatever shape of recovery, remains to be seen.

As emphasized in my previous posts, my personal view is that we will be stuck in a volatile environment until we have seriously tackled the underlying structural rigging problems of our economy that were decades in the making.

However, I am optimistic that, unlike before, these problems are being dragged kicking and screaming out of the shadows and into the public eye where with full recognition -- over time -- they will be resolved.

How to Solve the Dilemma: Core Asset Conservation

First, let's stop buying into this Wall Street notion that we have to "climb the wall of worry" for the rest of our lives. There are alternatives.

As a financial planner, I specialize in the management and preservation of what are defined as Living and Legacy Core Assets.  For my clients, the bull vs. bear dilemma is solved by placing these core assets in a step structure that provides, safety of principal, locked-in gains as credited and liquidity.  By utilizing the indexing method, clients are able to share in the upsides of the market, but have an automatic defense system in place that eliminates the possibility of losing principal or credited gains whenever the market wave patterns turn negative.

When you know that your Living and Legacy Core Assets are safe, with non-core assets that have direct exposure to the markets, you are in a far stronger position -- financially and psychologically -- to either try and time the upswings and downswings, or just ride out any of the more severe downturns which may occur and not be forced to sell at the wrong time.

From the standpoint of timing, milestones in life, such as college tuition, an untimely death or guaranteed retirement income are totally indifferent to whatever state the economy or the markets may be in at the time they arrive. 

True asset allocation is adding the guarantees of the step structure as a permanent feature to the mix of diversifying risks among the wave patterns of various assets classes in order to provide the stability you can rely on to support the milestones for yourself and those who depend on you.

For a more detailed explanation of Core Asset Conservation, click on the following link:

http://www.financialconservation.com/core_asset_conservation.php

http://finance.yahoo.com/tech-ticker/article/369201/Why-Jamie-Dimon-Wants-to-Silence-Paul-Volcker?tickers=JPM,GS,MS,WFC,BAC,C,XLF

"The numbers are bleak -- unemployment has surpassed 10 percent for the first time since 1983 -- and Warren is not surprised.

'Let's face it,' Warren said, 'This is sort of how we went about the rescue -- we rescued at the top and we left the bottom to kind of fend for itself -- and that's showing up in the unemployment numbers.'

Warren went on to explain that the report is really about the guarantees the Government made to protect banks' assets while leaving the public out to dry.

Morning Joe host Joe Scarborough suggested that it was the old 'socialize the risks, privatize the gains' scenario, but Warren took it one step further.

'The way I think of it is: they say something like 'Give me your money, investors and I'm going to Las Vegas and put it all on red 22. And if red 22 comes in -- woo! we are RICH. If red 22 doesn't come in, don't worry because the tax payers will pay you back the money you invested.'"

See post: The Cheerleaders vs. The Chicken Littles and comments re "A Jobless Recovery"

http://www.huffingtonpost.com/2009/11/06/elizabeth-warren-we-rescu_n_348397.html

http://www.pbs.org/now/shows/546/index.html