There is still a great deal of uncertainty about the future of our economy and financial markets. There are some legitimate reasons driving this uncertainty, but the biggest driver isn’t necessarily any specific fact or reasoning: it’s human emotion. Why? Perhaps because nearly every American is bombarded relentlessly by media sources which consists almost entirely of bad news – because bad news sells. Did you know that after the recession beginning in July 1990 was officially declared at an end in March 1991, Time Magazine continued to report on the recession on its cover until January 1992 – ten whole months after growth in the economy had resumed?

So we decided to give you the brighter side of the story—some things that are going right in our economy, both globally and in our great nation. Then we wanted to share a few tips to stay ahead during uncertain times.

The Good News

• The U.S.A. GDP forecast is 3.0% in 2011 and 3.2% in 2012. The world GDP forecast is 4.4% in 2011 and 4.5% in 2012.^4.
• By year end, business investment in new equipment is expected to jump 12%.^1.
• Spending around the world will climb about 3% this year and come close to $6 trillion in 2012, topping the 2007 prerecession total. ^1.
• Unemployment levels continue to decline quarter after quarter—which, by the way, is a lagging economic indicator.
• Companies based outside the U.S. now employ more than 5 million workers in the U.S. and pay them more than $400 billion in compensation.^2.
• Our great nation was ranked 2^nd among large countries in the International Innovation Index. ^2.*
• In the Standard & Poor’s 500 Composite Index (S&P 500), international revenues play over a 50% role in these companies bottom line number: Apple, Exxon Mobile, General Electric, IBM, Johnson & Johnson, Procter & Gamble. ^5.
• In 1988 only 189 companies in the world had over $1 billion in sales. In 2008 3,641 companies had over $1 billion in sales. ^2.
• Over the next decade, nearly 450 million individuals and families are expected to join the middle class in China and India alone. This can be related to the baby boom after World War II. ³

Tips for Uncertain Times

• Remember that investing should not involve emotion. Your investment plan should have a disciplined process behind it. In fact, it should feel like riding a bike—steady as she goes. This means you will often go against popular opinion. You will buy, not sell, when things are down. Likewise, you will sell, not buy when things are performing at their best.
• When people are sick, they go to a doctor. They do what the doctor says when he diagnoses the illness. If your investments have been sick, go to a trusted advisor and do what the advisor says.
• Be proactive rather than reactive. Don’t wait for the next bubble to burst. Just because it has been a good investment, doesn’t mean it will stay one. Consider where interest rates are and remember the inverse relationship they have with bonds. When interest rates are low, bond prices are high, but when interest rates go up, bond prices fall.
• Have an income plan for the next 3-5 years, today. Do you know where your income would come from if we entered another recession today? Would you have to pull money out of a down market? Have a plan to avoid this.
• Remember fear can cause us to go broke safely. CD’s real returns have rarely kept up with inflation, much less provided an income and kept up with inflation. Think about how many bags of groceries you were able to buy for $100 15 years ago. Now how many can you buy for $100? Or what about a $100 worth of gasoline? What is your plan to stay ahead of inflation?

Food for thought: Do you think there is less risk in the S & P 500 Composite Index today priced at 1300 than on June14, 2007 when it was priced at1522.97? Consider that uncertainty wasn’t in the headlines in June 2007.

1. The Kiplinger Letter—May 20, 2011
2. The Boston Consulting Group, National Association of Manufacturers and the Manufacturing Institute, innovation indexes, 2008.
3. “Second Among Equals: The Middle Class Kingdoms of India and China,” 2007.
4. The Kiplinger Letter—April 22, 2011
5. Factset (Reuters Fundamental Database) Data as of each company’s most recent fiscal year as of December 1, 2009.