SEC loosens up margin trading

Securities and Exchange Commission staff has given the green light to the New York Stock Exchange's new type of "portfolio margining," signaling the relaxation of regulations that have been in place since the Wall Street crash of 1929, according to published reports.  Does anyone else see the irony in that?  Why are we getting rid of controls that helped prevent another 1929 crash and subsequent depression?

 In my analysis of the stock market over the years showed me that the more the stock market changes the more it’s still the same.  Every so often some “smart” Wall Street types tell us it’s different this time.  Or the latest one is that the government debt of $8.7 trillion doesn’t matter as it is still small in relation to our GDP.  (GDP is all the total goods and services we produce each year)  I don’t know about you but I was always taught the borrower is slave to the lender.  So at some point our creditors (Japan and China being the largest) are going to have the ability to tell us what to or not to do.  I don’t like that idea, do you?

 "As Comptroller General of the United States, David Walker, has pointed out, this entitlement driven unfunded growth in spending will impose staggering financial burdens on our children and grandchildren.

 "The total present value of unfunded federal obligations of the federal government, or fiscal exposure, is now $50.5 trillion ($38.8 trillion of which is due to Medicare and Social Security.)

 "This exposure translates into a financial burden of $440,000 for every household or, put differently, a mortgage of $170,000 placed in the crib of each and every baby born in America."

 David Walker continues to run around the country warning us citizens of impending disaster if changes aren’t quickly made.  Doesn’t that tell you something?

 I believe that the stock market is overvalued today when you use historic P/E ratios.  The major reason the markets have continued to grow is due to the fact that the Federal Reserve continues to add dollars or liquidity to the system.  Someday it will likely backfire as liquidity shows up as inflation in the future.

 If you are concerned that your existing investments may not stand up to the future predicted by David Walker and others, call or email our office.

Robert Matheson
Matheson Financial Services
239-403-8727

Matheson Financial Services
"Advice You Can Trust"
Robert Matheson, Registered Investment Advisor, CPA*, CFP®, CEPP
*Registered in Florida and Minnesota

The information and data contained herein has been obtained from sources believed reliable, but is in no way guaranteed by Robert Matheson or Matheson Financial Services as to its accuracy.  Furthermore, this report is provided as a complimentary service by Robert Matheson and is not a solicitation, or an offer to buy or sell any security, mutual fund, commodity or any other product mentioned in this or any other report.  Past performance does not guarantee future results.