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Aron Huddleston talks with WOWT in Omaha about what investors should be focusing on in today’s market environment:

 Video used with permission of WOWT

Update:  The transcript to Roland’s video can be viewed by clicking the link below.

Roland: Greetings.  How about this technology?  The digital age has come even to this office and you’ll have to call the office and thank Don Davidson for this. 

He came in here and twisted my arm and said, “Talk to the folks about what’s going on.”  Okay.  Well, we’ve had a wild ride, but before I talk about that I want you all to listen to the radio show [September 21] this Sunday because we’ve interviewed Brian Wesbury, one of my favorite guys - you’ll love the this show so tune in, you’ll feel better, very informative.  It will be on www.manarin.com/radio_show/ later Sunday and tell your friends that are scared to watch it.

Wild ride this past week and for me it’s nothing new.  I’ve seen so many bear markets in my 40 years of watching the market.

1:04  So whenever these things happen, I borrow and buy and I have told you all and you’ve all heard me.  When doom and gloom is thick, it’s usually a great time to invest.  So in these past few days we’ve had a few panic clients call and that usually indicates a market bottom.  Technical indicators like the VIX spelled a market bottom today.  Today is Thursday, the 18th of September ‘08.

So my recommendation is if you can, take advantage of it.  If not, just ignore it.  Usually following a bear market of this magnitude, the average year following that the market has gone up 30 percent.  So I can’t promise you a year from now we go up 30 percent, but we are going to go up sooner or later and now is the time to be buying and not selling.  That’s about it. 

2:00  The derivative market is what has caused all this disaster and I’ve been complaining about it for a dozen years and if it ever does hit the fan, it’s going to be in the derivative world as you’ve been watching the dominoes fall.  Fortunately, they’ve only been in the financial sector and it’s nowhere near as bad in my opinion as it was in 1989 and ‘90 with thousands of S&L’s going down.  But anyway, bottom line today is the economy is strong.  All the central banks are pitching in to solve the liquidity problem - and what follows that is a confidence problem which is where, if it’s going to hit the fan, it’s going to be because of the confidence issue with derivatives.  And if they all decide to get out of the game at the same time, it can’t happen. 

3:00  So what choices do you have.  What do we do?  Well, a lot of people think that by bailing out and going over to a money market fund or even a guaranteed index annuity, they will be safe.  Wrong.  They’re going to be holding currency units or claims on currency units and if that derivative house of cards hits the proverbial brown stuff, it’s the currency that collapses; the paper dollar.  Then what are those guaranteed insured investments worth?

Zippo versus you broadly diversifying in the equity market.  When the dust settles, you still own some of the best companies out there.  And when the new currency comes out, you will maintain a measure of wealth versus being wiped out sitting in paper money.

4:00  We had a 180-degree change in risk somewhere back in the 60s and the 70s as we got away from the gold standard.  So if the derivative house of cards crashes, you are better off in a portfolio of stocks than you are are in a guaranteed and insured investment.  The crowd went panicking into Treasury bills down to getting a negative yield on them which is insane. 

It just goes to show you it doesn’t take much to cause a panic.  The probability - a very high probability, in fact enough so though I don’t worry about a crash is that we’ll muddle through.  The central bankers will provide the liquidity needed and somewhere down the road this will all be forgotten because the media will be focusing on the new noise du joir to frighten you.

5:04  When you look at the big chart on my wall it puts things in perspective.  That goes back to 1921 and if we come back and visit 20 years from now, it will look the same.  The big dip in the middle of that chart is not Carter, it’s Nixon.  So even if our friendly socialist gets elected, oh, let me qualify that, there’s two socialists running - if the worse one gets elected it doesn’t matter, we’ll muddle through.

So I’m very bullish; I’m wildly bullish.  I’m borrowing to buy more and I recommend you do the same.  Well, not necessarily borrow if you lose sleep, but I am. 

6:04  So bottom line is don’t worry about it, but if you are worried, don’t do the wrong thing because if it does hit the fan, if your fears come true, that which you run to feel safe in is the one you get wiped out in.  Having said that, tune in Sunday, and the following Sunday.  Peace and goodwill.  Bye, bye.      

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