Seymour Zises, President and co-founder of Family Management, writes bi-monthly opinions on issues and observations of relevance to clients and investors.

Tightrope
September/October 2009

It’s roughly one year since the financial meltdown started. I do not know if anyone could have predicted the series of events that has occurred since that time, but certainly there are some lessons to be drawn from the “Great Recession,” which, contrary to the press, is by no means over. Lesson 1: Don’t borrow too much money. Lesson 2: Don’t think that your risk tolerance is higher than it really is.

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A Really Good Show
July/August 2009

The Wall Street Journal reported that “the percentage of homes that are vacant fell 2.25% in the second quarter to about 18.7 million units, the lowest rate since mid-2006 and a sign that housing market conditions are gradually improving.” That is really good news – what is not good news is that the government is piling on debt like never before. Our thinking is although short-term interest rates are likely to stay low for some time, longer term interest rates will inch higher as investor expectation of increasing amounts of debt and inflation spooks the credit markets.

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Zig Zag
July/August 2009

What is the price to earnings multiple on hope? The stock market advanced as soon as President Obama said that it was a good buy. Did he mean a “good-bye”? Maybe the President should head for Wall Street after his career in government. As the markets have surged over 30 percent in the last few months, we find ourselves saying “where’s the beef?”

In referring to the economy, Larry Summers, a former Treasury Secretary and the current Director of the National Economic Council, said that it no longer feels like a ball falling off a table. So does it feel like a ball bouncing once it has fallen off a table?

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Quadrillion
July/August 2009

Not too long ago, a billion dollars was a lot of money. Not too long ago, a trillion dollars was a lot of money. Well my friends, welcome to the new world, “The Quadrillion Dollar World.” Before too long, we’ll hear that term as our deficit and expenditures rise to unprecedented levels. As the world becomes increasingly less confident in central banks, the price of gold has continued to rise. There is an inverse relationship between the two. The lack of confidence in paper money is showing up all around the globe.

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The New Deal
July/August 2009

“We must accept finite disappointment, but we must never lose infinite hope” said by Martin Luther King, Jr. These days, his comment could not be more relevant. The underpinning of every capitalist society is the financial strength of its banks. As of this writing, most of America’s large financial institutions have been compromised by loose lending standards and securitization of residential and commercial mortgages.

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