Economic Model Results from the Past

If the lights come on January 2, 2000, sell all technology issues because companies spent 3 times their technology budgets to get ready for Y2K.

When the lights came on, we sold all technology issues.

Results, technology issues went down 65% over the next 3 years.

The Government said they would loan money to the banks at 1%, the lowest rate in 41 YEARS.

The rule is: If interest rates go down, bonds go up. If interest rates go up, bonds go down. We sold all Bonds on that day.

Today the rate is at 0% and Bonds can only stay the same or go down, why would you have an investment that didn't have an upside possibility?

Gas was at $1.79 per gallon and Oil was at $35 per barrel.

The model said Gas would go to $2.50 and Oil to $70 per barrel

We bought Gas and Oil stocks that day.

Results: Gas went to $4.00 per gallon and Oil went to $140 per barrel. We just made a lot more money than we thought we were going to make.

Mortgages were way too high and had to fall.

The model said we would lose 100 Billion on bad loans.

We sold all Mortgage stocks that day. They lost 3 TRILLION.

Unemployment is badly understated.

The Government told us that unemployment was 9.1%

The model said unemployment was 16.9%

The difference was the people that had benefits and lost them were no longer counted even though they were still unemployed or underemployed. College students graduating and not finding jobs were not counted because you have to have been employed first, and since this was their first real job, they were not counted.

Stocks are badly over valued.

The Dow was at 12,800 and the model said it will fall and will eventually go back to 8,600 when Europes troubles and the US Debt troubles all materialize.

Major European Banks are on the verge of major issues.

US DEBT is unsustainable and drastic measures need to be taken to get under control before it cant be solved.