We are in interesting times and we have many choices before us. This month’s report includes strategies that could help you capture profits and keep you on the right side of changing trends.

Geopolitics are changing the game. Right now the world is experiencing great uncertainty surrounding the protests in the Middle East and Northern Africa. This political volatility is impacting more than just the people living in these countries. How will it impact you, the investor?

Is the US the next nation to face political upheaval? In any economy with large debt and high unemployment it is inevitable that calls for extreme political change occur. We are seeing it abroad. Will we see it in the U.S.? What else can explain Donald Trump as the most prominent GOP presidential candidate?

Good earnings continue to drive the markets. Once again, companies report earnings that beat estimates, the Dow pushed through 12,800 and we are seeing strong merger and acquisition activity. However, much of the activity is due to the weakening dollar. My report suggests strategies to position your investments for the probable downturn to take effect in 2012.

The GDP and employment rates. U.S. unemployment numbers fell for the fourth straight month and net employment increased. So, why did April’s jobless claims jumped unexpectedly? With overseas talent pools competing with U.S. workers, what is the employment outlook going forward and how will it impact U.S. GDP?

Changes in the Feds policy will see interest rates rise. Quantitative Easing ends in June and the gradual outcome will be higher interest rates, a stronger US dollar and a weaker stock market. Read this month’s report to see how this policy change may impact your investments this year and into 2012.

The US dollar and debt - Wheels within wheels. Why is no serious plan in place to deal with the U.S. debt and the declining US dollar? A weaker US dollar makes U.S. equities cheaper to international buyers and US goods cheaper to international shoppers, which is good for the US economy and stock market. This month’s report opens a discussion about possible motivations behind current US fiscal policies.

As markets become more complex and international power plays change the geopolitical landscape, it is critical that you discuss the investment ideas in this month’s Economic Outlook with a qualified financial advisor, focus on your strategy and take action.

MAY 2011 EconoMic outlook

ISSUE: MAY 2011

In The May Economic Newsletter You Will Learn:

An integrated approach to nurturing your wealth and achieving your financial goals.

Inside This Issue:

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PAGE 3: EArnings drivE A strong stock MArkEt PAGE 4: The stock market responds to strong earnings and efficienciesPAGE 6: cAnAdA’s strong EconoMY MAY fAltEr with thE coMing ElEction And Much More...

This month’s report is somewhat over-weighted with positive news and the impacts of a stock market continuing to move upward. But even as the markets continue to move in a bullish trend there are still indicators we must watch closely. So, this month I will discuss some prudent steps investors can take to continue capitalizing on the gains in the market, while sharing my interpretation of events that could cause a correction in many sectors.

The information I am giving you is based on my opinions, observations and interpretations of events around the world. However, my conclusions are not necessarily right nor are they the only opinion you should consider when making decisions. I am not a licensed financial advisor. I strongly urge you to discuss any of my opinions with a licensed financial advisor before you take any action. Ultimately, you are accountable for your own investment decisions.

Let’s start with the unfolding story of the death of Osama bin Laden. Some may argue that it is never good to celebrate a death but the death of Osama bin Laden comes with a gigantic “BUT”. It is never good to celebrate any persons death BUT when a person’s sole purpose is to under mind peace on an international level then that person is better dead. Osama bin Laden had many attacks against not only military targets but also civilian targets. The very short update if you have been shut out of existence for the last 16 hours is that President Barack Obama ordered an attack at bin Laden’s suspected location at Abbottabad, Pakistan. The high risk operation without the involvement of Pakistan was successfully carried out by United States Navy SEALS. Bin Laden was shot in the head and killed by the SEALS. With his corpse in custody, genetic testing was done to verify that it was indeed bin Laden. Shortly after verifying his identity, he was given a burial at sea.

The United States has done an excellent public relations job portraying this as “justice served” and not “revenge”. Some persons on this planet who cause misery to mass numbers of people are better off dead.

That list includes the murderous Zimbabwe tyrant Robert Mugabe, Hugo Chavez from Venezuela who has destroyed his nations economy and Muammar Gaddafi who has stolen billions from Libya while the majority of his citizens live well below the poverty line and is the cause of thousands of deaths as this sociopath will not step down. Yes there are people who are better off dead and the United States bravely took one tyrant off the list today and did humanity a huge favor.

Let’s commend the USA under the leadership of President Obama for a brave and necessary action. For American it is a day to be proud!

With such an event happening it is not always a smooth transition to discuss the economy but let’s do so. First the bin Laden death had no effect on the markets today. There is however a host of economic indicators that we must discuss.

MAY 2011 EconoMic outlook

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The U.S. markets remain very strong and are being led by strong earnings. Strong earnings by S&P companies are a sign of a recovering economy and a stronger consumer. So far, 74 percent of companies reporting their earnings have far exceeded expectations and it is estimated that growth year over year for company profits will be at 14.7 percent.

The sector that has out performed all other sectors is technology. The main reason is because the US dollar is so weak it has made U.S. exports much more attractive on a competitive level.

Strong earnings news, especially from high profile companies like Intel, Delta Airlines, Ford Motor and 3M, have reignited the bullish mood in the stock market. By the end of April, the Dow Jones Industrial Average was trading at its highest level since May of 2008. Smaller stocks were doing even better, with the Russell 2000 Index also approaching a record.

Strong earnings have helped investors shake off news of the S&P downgrade of the credit outlook for the U.S. government. It seems at this time investors are able to tune out bad news and drive stock prices to new highs.

Bernanke breaks his silence

For the first time ever Bernanke held a press conference. The Federal Reserve Chairman lifted the veil of secrecy and mystique that has shrouded the Central Bank for decades. He stated that inflation is “stable” and that there is no need to raise interest rates at this time. This means we will have a continued weak dollar, which is good for gold, U.S. exports and a robust stock market.

In my opinion, the most important thing that Bernanke accomplished was he managed to handle the first ever news conference following the release of a policy statement and was able to give the Central Bank a more human face, which allowed him to convey the Fed’s core message without rattling the markets.

He did this while affirming that Quantitative Easing will end in June. The end of quantitative easing is a negative for the markets as interest rates will eventually rise as a result. Still, it will be many months before we see the effects of the end of the quantitative easing practice.

This change in policy will likely have strong negative impacts on the stock market in 2012. Unless the economy continues its positive momentum it is likely that this change will make 2012 a sell-off year for America stocks.

This is why I suggest that investors start a discussion with their financial advisors about taking money slowly out of the market and moving to a larger cash position, because when Quantitative Easing ends the gradual result will be higher interest rates, a stronger US dollar and a weaker stock market.

The Feds don’t state it publicly, but they are delighted with a weak US dollar. The reason behind their optimism is the fact that cheaper US goods and services help increase the sales and profits of U.S. companies and that is good for the economy.

The GDP and employment rates

On the negative side, U.S. economic growth for the first quarter was only 1.8 percent. This is a decline from 2010’s fourth quarter growth rate of 3.1 percent. This drop is not going to do anything to help the unemployment situation in the United States. In order to see a significant decline in unemployment numbers we would need to see U.S. GDP growth hit 5 percent or more and stay there for an extended period of time.On the positive side, the U.S. unemployment rate declined for the fourth straight month to 8.8 percent and net employment increased by 216,000 jobs. So, we have seen some improvement there.

However, during the last week of April jobless claims unexpectedly jumped by 25,000 to 429,000. This is the highest claims level since January 2011. Although this is negative news it reflects only one week, so we’ll be monitoring this to see if it becomes a trend.

To give you some historical perspective about where we are with regard to employment, in 1982 the unemployment rate rose as high as 10.8 percent and in 1953, during the post war boom, unemployment was as low as 2.5 percent. I believe it will be a very long time before we see the unemployment rate return to the historical average of 5.7 percent.

This is mainly due to the huge labor pool of educated talent in other countries that offers U.S. companies high quality, yet inexpensive labor. For example, China and India are consistently graduating high level engineers, who score higher than American graduates on qualification tests.

This high level outsourcing will have a long term impact on the U.S. labor markets. America may create new jobs, but the quality of those jobs will decline as many of the jobs created by S&P companies will be off-shored to a cheaper labor and talent market.

EArnings drivE A strong stock MArkEt

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The stock market responds to strong earnings and efficiencies

The Dow recently pushed through 12,800, which is a multi-year high. It remains a good time to remain invested in all sectors discussed over the last year in my newsletters. The main discussion you want to have with your financial advisor at this point is to “stay the course, but take some profits and start moving into a higher cash position.” I’ll talk more about this later.

Meanwhile, the market remains in an uptrend. For many years there has been a saying “Sell in May and go away.” This idea was based on the behavior of many Wall Street Traders, who would sell their positions in May, take extended holidays and return to the market in September. This is no longer the case and I don’t believe we are going to see liquidity problems in May due to the fact that earnings reports are too strong and people are staying in the market.

In addition, the markets are being driven by strong merger and acquisition activity. This is always a sign of a recovering economy. It indicates that many corporations are spending again and stronger balance sheets have allowed them to stockpile cash. Those strong balance sheets are in part due to the Great Recession, which caused companies to achieve a much greater efficiently from employees.

How the American consumer deals with price increases

The U.S. consumer drives two thirds of the U.S. economy. As the consumer spends money companies see sales revenue increase. As a company’s revenues increase their profits increase. As company profits increase their earnings reports get stronger. As earnings improve investors increase their wealth. As investors increase wealth they redeploy capital by spending more. Thus the economy grows.

That is the cycle of wealth and the importance of the U.S. consumer.

According to the Bureau of Economic Analysis consumer spending rose 0.6 percent last month. Taken at face value, this analysis would indicate that consumers continue to grow their spending modestly despite rapidly rising gasoline prices and food prices. However, it is interesting to speculate that the increase in consumer spending may be due simply to the price inflation of normal everyday goods, rather than any deliberate choice to spend more money.

So, although the U.S. consumer is showing much stronger signs of spending, we can’t ignore potential setbacks. High oil prices as a result of geopolitical tensions in the Middle East and Northern Africa are pushing gasoline prices up into the $4 range in most states. This is having a negative impact on consumer spending. In addition, consumers have less money to spend, because in addition to paying inflated prices for food, they are paying higher

prices due to supply and demand. There can be no question that the floods in Australia, the drought in Russia, the bad weather in the crop belt of the United States as well as the tornadoes that ripped through the American South recently have all compounded to push food prices up.

The most surprising news is that consumer sentiment has not been dampened by the sharp rise in oil prices. However, if gasoline and food prices continue to skyrocket then we will definitely see a weaker consumer.

Why is the United States debt level the highest in the world?

The U.S. debt is the largest in the world. How did it get so large? Well, I can see a couple of reasons.

First, purchasers of Treasury bills still reasonably expect the U.S. economy to recover enough to pay them back. Second, America is such a large customer of foreign goods, investors like China and Japan allow the U.S. to run up a huge tab, so that it will keep buying their exports.

But that’s not the whole picture.

• Even before the economic crisis the U.S. debt grew by 50 percent; ballooning from $6 to 9 trillion between 2000 and 2007. • By December of 2008, the $700 billion bailout had kicked the debt up to $10.5 trillion.

Now, here is the interesting part.

The US debt is now at 95 percent of its GDP. This is up from 51 percent in 1988.

To give you an idea of where the U.S. stands compared to other countries, the debt level of the Euro Zone with its debt plagued countries is at 85 percent of GDP. At 95 percent the U.S. debt as a percentage of GDP exceeds the European Central Union.

Interest on this debt was $414 billion in 2010 up from $383 billion in 2009. Low interest rates are the main reason the debt payment is not much higher.

The interest on the debt is the fifth largest budget item after Defense and Security combined at $890 billion, Social Security at $730 billion and Medicare at $490 billion.

As I said, in 2010 we paid $414 billion just on interest for our national debt. The problem is that this debt payment will only get bigger as interest rates increase.

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“With this debt scenario, it comes as no surprise that credit rating agencies are looking at lowering their ratings on U.S. credit worthiness. If this occurs it will add to the upward pressure on interest rates.”

Efforts by Congress and President Obama’s administration’s to reach an agreement on the 2011 federal budget came up with a $38 billion reduction in spending.

The current deficit stands at $1.4 trillion. Cutting $38 billion will have little impact on what ultimately needs to be accomplished. The widening gap between spending and receipts is unsustainable. The only way to reduce the debt is through shared sacrifice and cut backs on entitlement programs such as Social Security and Medicare.

Ten-thousand baby boomers are retiring every day and health care costs are running out of control. If you go to the website www.usdebtclock.org you can see the U.S. debt growing by almost $20,000 a second. It is currently hovering at the $15 trillion mark. It is fascinating to watch, but tragic at the same time. • The U.S. budget deficit has been increased to $1.5 trillion for 2011 and this is approximately 10 percent of GDP for 2011.

• Revenue for the government will be about $2.2 trillion, coming mostly from taxes.

• Outlays are estimated at $3.7 trillion. These numbers make it clear why we must control the U.S. entitlement programs!

However, the bottom line is that there still is no concrete plan to cut the U.S. debt. If a serious debt plan is not undertaken the US dollar will continue to decline.

This causes me to speculate as to why no serious plan is being made. Is it possible that the Feds don’t want to make a serious effort to control the debt and strengthen the US dollar? It is a fact that as U.S. equities become cheaper, they become more attractive to international buyers. Thus, from that perspective a weak US dollar is good for the stock market.

The weaker US dollar is also why U.S. companies on the S&P 500 are reporting such strong earnings. Tech companies especially have huge exposure to the export market and are a major beneficiary of a weak US dollar. One possible conclusion we might draw from these facts is that we are seeing a deliberate effort to weaken the dollar and thus prop up the U.S. markets.

I also want to point out a fascinating fact that often gets missed in the face of our mounting debt.

Right now U.S. interest payments are very low in relation to GDP. This is because we are paying very low interest rates. Many people believe we are paying a fortune in interest, but relatively speaking that is not the case.

I think the Feds have taken the attitude that debt means nothing when interest rates and interest payments are so low. But that won’t be the case forever. We are nearing a day of reckoning when inflation causes interest rates to rise and the major portion of our debt payments go to pay interest on the debt rather than toward necessary government services.

With this debt scenario, it comes as no surprise that credit rating agencies are looking at lowering their ratings on U.S. credit worthiness. If this occurs it will add to the upward pressure on interest rates. High interest rates will cause dire consequences for the U.S. economy because of the interest payments we are making on the U.S. debt. This is the main reason why the Feds will continue with policies to keep interest rates low.

So, what should investors continue to do in this environment of a weak US dollar, low interest rates and high debt? I’ll get into more detail a bit later in this report, but I can sum up my recommendations in these few words: “Stay the course in everything we have been discussing for the last few years, but start taking profits and over time to increase your cash position to 50 percent of your current holdings.”

This recommendation is based on my belief that we will probably see a correction and a major market sell off in 2012 that will allow investors to pick up new positions cheaply.

United States politics are unpredictable

In an economy with such a large debt and high unemployment it is inevitable that calls for extreme political change occur. This is what we are seeing in many countries already and it appears that America’s situation is veering in the same direction.

This is a dreadful pity, but it explains why Donald Trump has become a lead contender for the GOP nomination. Now, as his credentials become better known I believe Trump’s support will wane. Still, it is interesting to observe how disenchanted the average American must be to even consider Donald Trump as a possible next President. With Trump as President the United States would totally lose its international credibility. So, as a betting man, I’m betting Trump won’t happen. Instead, I believe Trump’s prominence as a GOP candidate is just a short burst of rebellion by American voters.

Also with Obama’s great handling of the bin Laden situation the GOP Party will now have to find a worthy opponent and I believe Trump will quickly fade.

Canada’s strong economy may falter with the coming election

Many subscribers are from Canada so we always focus some time on what is happening in Canada.

Right now there are no signs of a slow down on the Canadian dollar. It is currently at $1.05. I believe that as long as there is no realistic plan to curb the U.S. debt and until the United States raises its interest rates we may see the Canadian dollar climb to $1.10 or $1.12.

Canada’s economy is strong for several reasons. The spike in commodity prices has certainly helped. Also, Canada’s banks are better regulated than those in other countries and for the most part they avoided the housing collapse.

The big issue on the table right now is the Canadian election. The Tories are Canada’s business friendly party and they have strong fiscal management skills, so they will likely win a minority government.

By the way, today is Election Day in Canada and while I am delivering this report, results of the election are literally being announced on the air.

The problem I see is that when the Tories announce their first budget there is a chance the opposition parties may vote against it, thus bringing the government down

and forming a coalition government. As Jack Layton from the NDP would have the second largest number of seats in Parliament, he would automatically become the Prime Minister.

Now, a lot would have to happen as far as deal making between parties in Canada, but it would be scary to hear the words “Prime Minister Jack Layton.” This would be a devastating result with regard to the perception of Canada’s economic direction by the world players. This would definitely cause a sell off in the stock market and downward pressure on the Canadian dollar. If Canadians value a strong economy they would not want a coalition government with Jack Layton as the Prime Minister. Canada continues to ride a world commodity boom and as oil prices and commodity prices remain high, so does the huge growth in the Canadian economy, which is rich with resources. However, even in this boom one sector is suffering. That is the manufacturing sector in Ontario and Quebec, because its goods and services have become too expensive due to the strong Canadian dollar. Canadian GDP growth will remain strong as long as the commodities boom remains intact and driven by demand from China and other emerging nations. The only thing that stands in the way of investors benefiting from this boom in Canada is politics. I am closely monitoring the situation.

Geopolitics are changing the game

We are still in the midst of the most active time geopolitically that we have seen in years. Libya has turned into a full scale civil war. Syria is shooting its own people and the United States has stepped in to freeze the worldwide assets of Syrian leaders. Yemen and Morocco may be the next dominos to fall.

The Middle East and Northern Africa are riddled with authoritarian regimes that are being exposed under a global microscope. Historically and presently, any dissent among civilians has often been met with violence as government forces attempt to crush any potential alternative voices.

What has changed in recent weeks and months is the meshing of various compelling issues, which have combined in ways that are forcing changes upon these regimes. These potent issues include the global financial crisis, rising food prices, increasing unemployment, and ethnic and cultural divisions, to name just a few.

The response from discontented civilians to these issues is appearing almost daily in headlines around the world. What we are seeing is unprecedented action being taken into the hands of a large population of well-educated, Middle Eastern youth. This young population is also experiencing very high unemployment, so it is natural that we are seeing a lot of potential political energy being channeled towards protest and change. This youthful population is also the first internet-savvy generation and it is effectively using tools like Facebook to mobilize their protests.

There can be no doubt that decades of authoritarian rule have forced citizens in these countries to suppress their thoughts and opinions. Now, when combined with all these other issues, we are seeing these ideas bubbling to the surface, written on the signs and called out in angry voices.

In some countries like Syria and Libya we have seen the protests turn violent, yet in other countries like Oman the public protests to date have been non-violent. As the world watches the Mid East undergo this upheaval, the biggest concern appears to be around who will grab control as these regimes fold. With the fall of each of these governments there is the possibility of the rise of a radical government led by Islamic extremists.

Right now the world is experiencing great uncertainty about the potential outcome of the current protests, as well as protests that may erupt in other countries in the future. This political volatility is impacting more than just the populations of these countries. Oil prices are moving up, but it is not due to supply and demand fundamentals. Right now demand is weak in relation to supply. Rather, geopolitical risk is being built in the price of oil and that

will continue as long as the uncertainty exists.This brings me to the closing section of this month’s report. What can investors do now?

What can investors do now?

Both economic and geopolitical factors are driving the global economy right now. I’ve given you my interpretation of these issues, along with some of my ideas about how events may unfold and impact economies in the near future.

It is now your job to take the information and discuss it with your financial advisor. It is your job to take a few of my suggestions and do your own thorough due diligence and research before investing.

The key to using this information is to avoid becoming a generalist. Wealth is built by focusing on a few specific strategies and investment sectors. Don’t try to do everything!

So, here are my suggestions for how to weather the current economic climate and position yourself for where I see the markets going.

1. Increase your cash position to somewhere between 25 and 50 percent of the money that you have invested in the markets and wait for a market correction. Eventually, with the high U.S. debt and interest rates due to increase upon the end of Quantitative Easing, we are going to see a huge market correction.

So, let us say you have $1 million net worth. You might hold $500,000 of your net worth in your home and other investments. If you have $300,000 in the stock market then I suggest that, after a discussion with your financial advisor, you take a cash position for a portion of that $300,000. I’m recommending at least $75,000 and as high as $150,000 of that $300,000. By doing this you will be able to pick up bargains once they have reached the bottom after the correction.

2. The tech sector is showing strong growth as a result of global demand for technology products and increased business spending on software and equipment. Also, in this weak US dollar environment technology stocks will continue to do well. Find a financial advisor who can help you select tech companies that export to other countries and benefit from the strong US dollar.

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3. Agriculture continues to be a major beneficiary of the price inflation resulting from the natural disasters we are experiencing in different parts of the world. The export market for agricultural products is strong as we’ve seen with items such as wheat skyrocketing due to droughts in Russia, Ukraine and Kazakhan. Prices have also risen for corn, cotton, meat and dairy products. Be sure to consult with your financial advisor about how to invest in agriculture stocks that benefit from inflation.

4. Natural Gas has been on a huge upswing since the disaster in Japan. Natural gas is now being viewed as a safe alternative to nuclear energy. Thus, having some exposure to natural gas is prudent even after its recent increase. Natural gas prices are still depressed compared to oil.

5. Oil is mainly driven by geopolitical risk and not supply and demand fundamentals. Oil is a depleting resource and the long term outlook due to much higher cost recovery of the resource means that the outlook for oil prices will always be bullish.

Oil will continue to go up as the US dollar drops. High oil prices will continue to have a drag on U.S. consumers, which as you know, drive two-thirds of the economy.

At the world oil conference this month a new term was coined. Most are in agreement with the term “Peak Oil” which refers to the idea that we have recovered all the cheap oil available and that from now on we will pay much more for newly discovered oil due to the fact that it is much harder to find and much more expensive to recover.

In addition, oil resources are depleting and over a long period of time they will run out. That is not a new concept. The new concept is “Peak Demand.” Peak Demand refers to the idea that as oil prices continue to rise, consumer demand for oil will weaken as consumers look at other alternative fuels.

With a weakening US dollar and depleting resources, all investors should have exposure to oil.

6. Companies with rising dividends are outperforming other companies in the S&P 500. One of the reasons for this is that once companies start to pay dividends these stocks can be purchased by many new funds. This creates more demand for the stock. Starbucks, Marriott Hotels, Travellers Group and many oil stocks have benefited from their announcements to increase dividend payments.

Investing in companies with increasing dividends is a way to stay ahead of inflation and secure higher income. It is amazing because in 2008 most companies were cutting

dividends during the economic recession. Now in 2011 a total of 157 companies have had dividend increases in the S&P 500.

7. Avoid the Euro. Europe’s over-reaching “right of passage” policy decreed that all its citizens required a long list of social programs including shorter work weeks, longer holidays and more benefits. This policy has created a continent of individual countries that have an inability to pay for all those policy perks. Greece will default on its loan and Spain and Portugal are very weak. The Euro is NOT a currency to hold in your portfolio.

8. As I have stated for the last three years “AVOID INVESTING IN BANKS.” Now, many famous economists say that you can’t have a strong market unless banking stocks are doing well. I disagree. For the first time in a very long time we are seeing that the markets can do well and don’t have to be led by a healthy banking sector. My belief is that due to the balance sheet shenanigans caused by mark to market rules, banks are just too risky. And another thing - AIG has now started to file lawsuits against the banks. I predict that banks will be the target of an endless stream of lawsuits for many years to come. It is inevitable that banks are going to suffer – and it is inevitable that they will pass their suffering along by subtracting the cost of all these lawsuits from their future dividend payments. As I see it, US banks will continue to show weakness and are a sector to be avoided.

9. Also avoid insurance companies. The Japanese earthquake and tsunami, along with the tornadoes this week in the United States are going to cause huge liabilities for many insurance companies. In fact, some of them could go out of business as they look for ways to avoid paying out claims. I’m sorry, but that is the way the industry works. Buying any insurance company without understanding who it has insured and its current exposure is a huge risk.

10. Due to the total lack of any plan to control the US debt we are seeing gold maintaining a strong bullish upward trend. Gold has reached over $1,500 per troy ounce. Ultra loose monetary policies and interest rates near zero will continue to lead many investors to favor non-yielding gold due to the lack of opportunity cost. In addition, inflationary pressures are good for gold, as well as the debasement of all currencies, sovereign debt and geopolitical concerns.

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However, with the coming end of quantitative easing and a likely rally in the US dollar at some time in the future, I predict gold will see a sharp sell off and investors should be lessening their exposure to gold.

11. Silver is in a strong upward trend, but at this point investors are gambling. Despite what silver promoters say, silver is not a precious metal like gold. Silver is first and foremost an industrial metal. Silver may continue to move upward, but at this time your involvement in silver is not justified by supply and demand fundamentals.

Historical trends show that we are in a very dangerous position with silver. Silver at this time is solely a momentum play. As more people buy silver Exchange Traded Funds silver will move upward on more buying volume. It could continue to rise much higher, however, the risks are extreme at this time. Investors in silver now must be very careful.

Here’s why. Silver is one of the smallest commodities markets and a few large buy orders can drastically run up the price of silver, just as a few large orders can result in a sell off that is both swift and severe. This is not the case for gold; gold trades in a much larger market and thus is less subject to this particular kind of manipulation.

If investors are over-weighted in silver they definitely should consider reducing their position to under-weight levels. For example, if silver now constitutes 10 percent of your total portfolio, you should talk with your investment advisor about bringing that position down to one or two percent of your total portfolio. It is a good thing to take profits at this time.

12. Overall, the credit ratings of many S&P companies are improving. It is interesting to note that a benefit of the Great Recession is that companies became much leaner and much better managers of money, assets and labor. Because companies have become much more efficient we will never see the hiring levels of the pre-Great Recession days. But on the upside, exposure to the S&P companies makes sense for investors due to better management of those firms.

13. Real estate is seeing some modest improvement. Nationally, sales of existing U.S. homes were much stronger than expected in March and sales have risen for two months in a row. It appears the downtrodden housing market is finally stirring without the benefit of government programs. This is a positive sign. The market seems to be recovering very slowly on its own.

It is still my opinion that Las Vegas remains the best place to invest. It has the strongest cash flows, the highest affordability index and holds the dubious honor of being the real estate market that suffered the most extreme sell off during the subprime crisis.

Las Vegas prices are currently 30 percent below the national median price. These prices will eventually be back on par

with the national Median price, which has been the case for 35 years prior to the mortgage meltdown.

If you are interested in learning more about this market, join me on one of my fieldtrip tours of the Las Vegas Real Estate Market. Simply send an email to education@allianceinvestor.com and we will get you our fieldtrip and tour schedule along with information to help you understand how you can profit in this market.

14. One investment strategy that I have seen work extremely well is the purchase of non-performing mortgage notes from the major banks. It is very difficult to deal directly with the banks, but mortgage notes can typically be purchased for one cent on the dollar and there are companies that are having great success in recovering a much higher percentage of the debt. If you are interested in learning more about the potential of this industry send an email to education@allianceinvestor.com and we’ll put you in touch with the right people.

I’ve given you over a dozen ideas for investing in today’s interesting environment, but remember what I said earlier: Focus your investing on just a few specific strategies. Don’t try to do everything! Wealth is build through focus, not by being over-diversified.

Lastly, I want to conclude this month’s report with some words of caution. Although the markets continue to move in a positive direction there are still many concerns for investors. • Standard & Poors reduced its outlook on U.S. debt from “stable” to “negative.” This sparked a broad sell off.

• Also, unrest in the Middle East kept driving oil prices higher, which is raising questions about consumer buying power; the logic being that as consumers must spend more on gas they have less to spend elsewhere.

• Then consider the steep decline in the dollar and the surge in gold and silver prices due to uncertainty about the U.S. debt and Washington’s unresolved budget debate.

• On top of all of this, June will see the end of the Federal Reserve’s quantitative easing bond purchase program, so summer will no doubt be very interesting.

All of these issues remain problematic and will continue to shape investment decisions at every level. So, talk to your financial advisor about my ideas and focus, focus, focus.

The next release of the monthly economic newsletter and economic webcast will be in late June. Stay tuned to your email for announcements giving specific details.

grow. protect. invest.

Mike LathigeeBoard Member,

Las Vegas Real Estate Club