Are you aware that the S&P 500 has pro­duced an after-inflation return of less than zero since 1996? Does your bro­ker keep telling you that stocks and bonds are the best place to be over the long haul with­out ever sug­gest­ing other options?

Has your bro­ker edu­cated you to the fact that stocks and bonds can go through long (20 year) peri­ods where they per­form extremely poorly — sub­stan­tially under­per­form­ing infla­tion? And, that dur­ing those time peri­ods, there are invest­ment strate­gies which tend to sub­stan­tially out­per­form stocks and bonds due to their inverse rela­tion to them — while hav­ing a pos­i­tive cor­re­la­tion to inflation?

Are you still using the same old con­ven­tional “buy and hold” invest­ment strat­egy — with the same, sta­tic asset allo­ca­tion — all while your portfolio’s value con­tin­ues to decline?

In real­ity, has “hope” become your pri­mary invest­ment strategy?

Are you com­ing to the con­clu­sion that a sig­nif­i­cant per­cent­age of the finan­cial ser­vices indus­try may be more about sales than advising?

As the U.S. Gov­ern­ment Account­abil­ity Office (GAO) reports in its Fis­cal Year 2007 U.S. Gov­ern­ment Finan­cial State­ments that $41 tril­lion of unfunded Social Secu­rity and Medicare are com­ing down the pike–and as you watch bil­lions and tril­lions of bailout after bailout take place — do you won­der where the money will come from to pay for it all? On that note, does the fol­low­ing quote by the cur­rent Fed Chair­man make you worry about the future pur­chas­ing power of your hard-earned dollars?

“But the U.S. gov­ern­ment has a tech­nol­ogy, called a print­ing press (or, today, its elec­tronic equiv­a­lent), that allows it to pro­duce as many U.S. dol­lars as it wishes at essen­tially no cost. By increas­ing the num­ber of U.S. dol­lars in cir­cu­la­tion, or even by cred­i­bly threat­en­ing to do so, the U.S. gov­ern­ment can also reduce the value of a dol­lar in terms of goods and ser­vices, which is equiv­a­lent to rais­ing the prices in dol­lars of those goods and ser­vices. We con­clude that, under a paper-money sys­tem, a deter­mined gov­ern­ment can always gen­er­ate higher spend­ing and hence pos­i­tive infla­tion.“
– Cur­rent Fed­eral Reserve Chair­man Ben Bernanke, 2002

If you are inter­ested in learn­ing more about meth­ods to help pro­tect your­self from poten­tially high infla­tion and dan­ger­ous eco­nomic con­di­tions, feel free to give us a call at 866–274-8719.

Sin­cerely,

Stephan R. Ern­harth, JD, AIFA
Vice Pres­i­dent
Ern­harth Group