>Rational Optimism

>Employment seems to be bottoming, interest rates are low with mortgages at 4.5%, and for now inflation is nonexistent. So in reality the worst is over and we should experience slow growth with 2010 being “OK” until the third quarter. However, investors will have a difficult time profiting from this and here are my top ten reasons.
1. Clients chasing returns from this year’s winners
2. Risk in the market has risen substantially from March 2009 of this year.
3. Investors have become complacent and have not readjusted their allocations to adapt to the risk.
4. Lack of diversification
5. Poor asset allocation
6. Rebalancing portfolios without a discipline
7. Trying to market time
8. Confusion between efficient markets vs. inefficient markets.
9. Financial information causing confusion.
10. Trying to predict the markets.

If you would like more information and clarification you can email me (william.riley@rileyhutto.com) for a copy of the book, “The Lies My Broker Taught Me”.
Let’s go for a trip around the world and I will share my thoughts on where there might be some opportunities for 2010.

East Asia may be the strongest player:
Japan has a budget deficit problem, a huge debt problem. Additionally, its’ interest rates are too low. That being said, it is one of the world’s great export economies and its’ banks are now in decent shape and real estate is fairly priced.
China is still a good play, but watch out for the second half of the year.
Korea and Taiwan both look to be in pretty good shape.
Australia and Indonesia look attractive unless we run into a commodities bubble.
India should do well in the first six months but could face physical issues early fall.

Onward to Europe:
Germany looks great.
I am very disappointed with France.
Forget about Greece and Spain.

North America:
The US will do well in the first half but faces monetary and fiscal crisis in the second part of the year.
Canada will do well will do well in the first half but like Brazil pressure could build in the second half.
Overall good first half of the year and the second half is a tossup.

One final thought, we could see gasoline prices back to the 4 to 5 dollar range by late summer.
The current plan to raise the ethanol additives in gas from 10% to 15% may cause the prices to dramatically increase.
I am currently booking speaking engagements in spring 2010, so if you would like me to speak to your group, please call my office at 817-870-4680.
Become a follower on Twitter at http://twitter.com/rileyhutto to get market insights and updates on the blog.

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About Riley Wealth

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