Tidbits from the TD Ameritrade Conference

Cheryl and l recently attended the annual TD Ameritrade National Conference in San Diego.  I can truly say that it was one of the best conferences I have ever attended.  While I will be sharing more specific information with clients one on one at meetings, here are some of the highlights:

 

General Colin Powell---He has unwavering faith and confidence in our nation and our people.  He sees great wealth created in certain countries over the next several years, countries like China, India and some of the Latin America countries.  This is good for the entire world because stability in the government and the economy is needed to create wealth.  We should not fear these emerging countries but rather embrace them.  The US is still the best place in the world to invest wealth.  Their success is our success.

Jeremy Siegel is a professor at the prestigious Wharton School of Finance in Pennsylvania.  Professor Siegel is still very bullish on stocks for the long run.  He showed charts that illustrate the real return (after taxes and inflation) of stocks from 1802-2010 is 6.7%.  The past 20 years from 1990-2010 (which includes the horrific recession of 2007-2008) shows the exact real return of stocks is 6.7%.  Cash and bonds cannot deliver this kind of return so it is prudent and imperative that in order to create wealth, an investor must be willing to invest in stocks.  He thinks the US market of good quality companies is poised to deliver strong returns over the next few years.  Price earning ratios are below the long term average and corporate earning are strong so therefore the price earning ratios will be rising.  He also showed charts that made a compelling argument to be investing in stable emerging markets such as China, India and some Latin America countries. 

Craig Alexander is Senior Vice President and Chief Economist for TD Ameritrade.  He said the US economy is on the mend.  We still have a long way to go but it is encouraging that we are on the road to recovery.  There are three key factors that will determine our recovery.  1.  Housing –currently we have approx 9 months supply of houses on the market versus 2005 when the supply was only 4 months.  We have too much product and there is more coming with short sales and foreclosures.  The housing market still has another 5% to decline in value before we hit bottom.  2.  Unemployment remains high at over 9% but he was optimistic that jobs are coming.  Companies have squeezed expenses all they can and are now experiencing growth due to increased demand for products and more access to credit.  This will result in slow job creation.  3)  State and local governments are struggling with reduced revenues and high liabilities to service.  Some states are worse than others like New Jersey, California etc… 

Bottom line is that Mr. Alexander also confirmed what Professor Siegel stated, the next few years will be good for equities.  Bonds will suffer and interest on cash will remain low but stocks will reward the wise investor.