Vic Bremson: Some new investment strategies

Dear family and Friends,

This is the latest in my searching for a good investment strategy in crazy times. I am changing some opinions about things.

I continue to rethink my concerns about the future and still have major misgivings about future interest rates. I am beginning to suspect that we are not having higher interest rates and inflation because there is the possibility that we are about to re-enter into a recession. My theory would go something like the following. I think Microsoft and Boeing will help the Seattle area.

1. Companies are not investing money into expansion in the United States or elsewhere. This is keeping pressure off of liquidity issues and are keeping interest rates down. It also means that possibly these companies do not expect the business expansion to continue.
2. Older people, are not investing in equities, they are struggling to find interest investments that will give them a living return. This is also keeping the cost down. They have tremendous wealth but don't know where to put it. The younger people are taking the risks. Real Estate still seems safer to people than other equities.
3. China and Japan continue to buy US paper and probably have to for some period of time. I think China will sooner or later have some serious problems which will put further recessionary problems on the rest of the world.
4. There is a body of opinion that I have been reading that suggests that China is building up a strategic inventory of oil and natural gas, just like us. This is putting at least short turn pressure on oil prices. I suspect that when oil prices begin to fall that natural gases will also fall.

My conclusions still take me to the following directions in my own investment strategies.

1. Stay with the big rich global companies that pay decent dividends. I continue to like the American Fund Capital Builder. It is a major piece of my investment strategy. I probably will buy more.
2. Stay out of junk bond funds. I believe they will get hurt especially if I am right about recession.
3. I continue to believe in health care, some energy-not over loaded and REITs. I think technology companies will not do great in a recession. I plan to look for a good fund that specializes in alternative energy companies as a long term play.
4. I would not invest in any emerging fund that has a major play in China. Their banking system is too weak. I think I will slightly increase my position in emerging funds.
5. I am moving towards preferring large consumer type companies over value stocks right now. Proctor and Gamble, Colgate, etc. I suspect that entertainment companies will also do fairly well. People won't give up their television.
6. All bond funds should be limited to 2 years or less. There is a good investment in US inflation bonds right now that will get you about 4%. A bond ladder makes little sense right now because of the yield curve.
7. Stay diversified and alert. Expect a major adjustment in the summer based upon reduced earnings reports.

I know the interest earnings will hurt on the high yield bond funds. I would rather go with REIT preferred that pay decent dividends.

What are your opinions?

DO NOT ACQUIRE ANY CREDIT CARD DEBT. NOT A GOOD TIME FOR THIS.

Victor