A Framework That Provides Clarity

During periods of “low visibility,” confusion reigns: for every indication of one trend, there seems to be a countertrend. The key is to glean from the collective wisdom of reliable leading indicators a clear signal that the economy is headed for a turn.



Opportunity (Still) Knocks

In volatile markets, the extremes‚ 'sell,' or 'stay put'‚ are bad answers for long-term investors. Think about adjustments instead.

Investors looked into the belly of the beast last week. The Federal Reserve made it pretty clear that it would raise short-term interest rates at the end of this month. Almost every type of investment you own howled at your heels, reacting to fears of slower growth. Most economists think that business faces a soft patch (not a recession) this summer and fall.

But because we can't know, the market riot probably isn't over yet. So what are you going to do about it? The extremes‚ either "sell" or "stay put"‚ are both bad answers for longer-term investors. Instead, look at where you're keeping your money and think about possible changes as prices fall. Here's what the playing field looks like now...

Median prices probably peaked last October, says Lakshman Achuthan, managing director of the Economic Cycle Research Institute. Since then they've declined about 4 percent, with, he says, further drops ahead. ...

When interest rates rise, bond prices drop. So where you stand on new bond investments depends on where you think rates will go. Achuthan expects just a small increase and then a decline, based on his expectation that inflation will ease soon. That makes today's bonds, at 5 percent, "very, very appealing," he says...