“No persons are more frequently wrong than those who will not admit they are wrong.”
-Author FRANCOIS DUC DE LA ROCHEFOUCAULD

POINTS TO PONDER

1. The Fed’s ultra-easy monetary policy is looking increasingly out-of-phase with the mounting evidence of a healing US economy. The manufacturing version of the Institute of Supply Management (ISM) Purchasing Managers’ Index (PMI) and its employment index have surged while ISM’s service sector index is also showing strong expansion.

“The mood in the market is better, but the fundamental problems of the euro zone remain unresolved.”
– NOUIEL ROUBINI, NYU Professor of Economics (and one of the few academics to warn in advance of the housing bubble’s demise).

1. The US stock market has witnessed a persistent narrowing of the overall valuation premium by faster growing companies.

“There’s clearly a buyers strike in the market for state and local government debt that
is largely based on fear and misperception. The mass selling of munis, which represent
the bedrock of the US economy, is incredible.”
– Influential strategist and economist DAVID ROSENBERG

“The aggressiveness of our accommodative policy may soon backfire on us if we
don’t begin to gradually reverse course.”
– Philadelphia Fed President, CHARLES PROSSER, referring to the Federal Reserve’s government bond buying program.

POINTS TO PONDER

1. A few years ago, the US economy was artificially stimulated by hundreds of billions of home
equity withdrawals,

“The most reliable way to anticipate the future is by understanding the past.”
-JOHN NAISBITT, Megatrends Author

Special message: First, Happy New Year to all! Based on our clients’ investment results for 2010, it was certainly a happy old year. We’d be thrilled to see anything approaching those returns in 2011.