Playing the hand you were dealt.

This posting continues a topic we have pursued this month regarding what we call the "political economy."  As in those posts we pointed out the simple fact that Obama and liberals are in charge of the economy now period.  Accept this fact. Thus as we have noted in the two earlier post like it or not the rich get richer and the poor get poorer under this regime.  If you have assets to invest smart investors find ways to ride the tide and make money.  This leads to the fact that many investors do not like not only the Obama economy approach, but really do not like the free money low rate environment that comes from the huge intervention of the federal reserve.  

If you have this opinion of the current economic environment here is something you will not want to hear.  That is the appointments Obama has made to the federal reserve since becoming president have his economic ideas as well and they now hold sway over that board and will do so for many years hence.  Therefore this free money environment will continue for the foreseeable future.  Maybe not so much the extra low interest rates since the markets have some sway there and the increased demand for loans will tend to temper those low rates, but nothing radical like anything above say a 5% handle home loans for example. 

Add in that Hillary Clinton will most likely be your next president and you get some of the same economic policies. Under a Hillary regime truth is you will not only see the rich get richer, but frankly the rich get much richer more quickly to be honest. Her contacts and attachments to Wall Street and money financial interests mean that pace will quicken. So like it or not only fools fight the Fed.  Let's also say only fools fight the political economic environment as well. 

All this financial engineering can not last forever as eventually the piper has to be paid and the house of cards will come down in some form.  We have no idea presently what that scenario will look like when it happens and more importantly we have no idea when it will happen.  We will say we believe that time of reckoning is awhile off due to this political economy being a very very slow growth kind of expansion, if you can call it an "expansion"  when few new jobs are being created.  Slow growth means not much pressure on rates or the money supply. Therefore we believe this stock market move will persist longer than many believe now and could stretch out for another five years. What we do know is right now the current economic environment is the hand we have been dealt to play and you play the hand you are dealt.   The only other choice is sit on the sidelines and wait and frankly lose out on the gains going forward.  Some have done just that for the last 6 years and some will continue that approach.  We prefer to play this hand and take profits when it becomes time to do so. That time is when your securities become fully valued.  

Taking profits now when your picks are fully valued requires patience and close monitoring.  It also requires you do not take a non emotional approach to buying or selling stocks or bonds.  We in the past year have done something we have never done before and that is to selectively sell highly appreciated municipal bonds to harvest gains and then reinvest in other munis for the same gains.  We have already discussed our going to large cap even mega cap stocks for trading to take advantage of this political economy.  Obama, Hillary, and the federal reserve are dealing the cards now.  Use your assets to take advantage of this new environment, not fight it.