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37 Years Ago Today

I admit it, I’m a history geek. And today is one of the seminal events in history during my lifetime: 37 years ago today, the final group of Americans was released from North Vietnamese Prison Camps and 37 years ago tomorrow, the North launched the final leg of what would be the fall of Saigon a bit over two years later. On April 30, 1975 (yes, the 35th anniversary is right around the corner) the North invaded Saigon and reunited the North and South under communist rule.

History is important and even though we in the investment business say that history is no guarantee of future results, it sure can be used as a guide for our actions. Right now, our actions are all about raising cash in client accounts through stop losses and price target sales – with plans to reinvest when the market pulls back to technically oversold levels. The last time we saw these signals in an uptending market were in June, 2008 when we raised a significant amount of cash. Clearly we didn’t see a crash coming – no one did – but the indicators told us that a correction was ahead.

I am working on the quarter-end newsletter and it is difficult. I’ve started it in numerous ways and tossed the results, only to start over yet again. I want it to tell you that the past year has been a historic recovery from a historic crash. I want it to tell you that the fall and subsequent rise in stock prices is really just a segment of a larger cycle that you can see in the market going back almost 140 years. I want it to tell you that the period just ahead requires a different style of investment management than the year just past. I want it to tell you that increased regulations and taxes present a drag on economic growth and puts a floor under unemployment, much like Europe, but that it isn’t the horror show that many are predicting (unless of course you are one of the 10% that are probably semi-permanently unemployed).

And I want to tell you all this without raising your blood pressure – the newsletter is not a qualitative statement on anyone or anything but rather a map for us to navigate the investment markets using history as a guide.

Based upon history and how the markets have behaved when certain technical indicators have reached currently overbought levels, the markets go down. Based upon history, when interest rates start to edge up like they have the past week, markets go down. Based upon history (European, that is), when a society transitions to providing a social welfare safety net that is funded by the middle class and upper class, economic growth slows and unemployment remains unreasonably high.

But, you’ll read more about all of that in the newsletter. For today, its probably better to reflect on what happened 37 years ago today and hope that our current efforts in the Middle East end better.

’69’s Summer of Love and ’09’s Summer of Tea. History doesn’t repeat but it sure can rhyme.

Mark

PS – over the next month, I’d like to incorporate some videos from YOUR favorite movies and music related to the Vietnam war era and see how we can weave them into our investment discussions. They can be movies of times, music from the times, or news clips showing action from the time. You tell me what moves you about that period and I’ll work to find it and work it into our blog posts between now and April 30, 2010. Have fun and be reflective – I’m sure I will.