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There’s certainly no lack of heat when it comes to a Florida summer, but unfortunately that heat hasn’t spilled over into the markets or the economy this recent quarter. The markets have reversed their course with the US Domestic stock market losing 11.21%. Year to date results aren’t quite as bad but still down close to 6%. We have included three articles for your interest. Jeremy Grantham’s second quarter report is included first. We have found Jeremy Grantham’s forecasts to be some of the most accurate (his 10 year forecast 10 years ago was that the US stock market would be virtually flat; he was right on the money). The report is fairly long but here are a couple of excerpts: “Well, I, for one, am more or less willing to throw in the towel on behalf of inflation. For the near future at least, his adversary in the blue trunks, deflation, has won on points. Even if we get intermittently rising commodity prices, which seems quite likely, the downward pressure on prices from weak wages and weak demand seems to me now to be much the larger factor”. “Today this forecast suggests that it is possible to build a global equity portfolio with just over the normal imputed return of around 6% plus inflation. With our forecast, this can be done by overweighting U.S. high quality stocks and staying very light on other U.S. stocks. Let me give a few more details: just behind U.S. high quality stocks, at 7.3% real on a seven-year horizon, is my long-time favorite, emerging market equities at 6.6%. This is now above our assumed 6.2% long-term equilibrium returns.” Note: Grantham’s forecasts are for a 7 year period. Included is a second article that alerts you to some of the not so obvious fraudulent schemes you should be aware. And to end on a lighter note the last article is about some summer savings tips. When we have our quarterly meetings we will be focusing on capital gains and losses in light of the new tax law changes going into effect next year. We hope you enjoy the rest of the summer! Best Regards, Keith & Debbie
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