The market today is filled with glee and greed.  There is this prevalent UNANIMITY OF BULLISH OPINION.  Just about everyone you hear and/or read has the strong feeling that all is well.

The second strongest belief is that if you invest in China, India, and Eastern Europe you will automatically become rich with little or no risk.  I strongly believe that they are correct—in the LONG TERM. However, in the near term there is exponential risk in doing that AT THIS TIME.  Everyone speaks of great gains made by overseas investing and that is quite true—again, however, at what risk (when the gains are great, the risk is also great).

If it is possible for one to focus 2 to 5 years out, it is time to position for the future as the past is past, of course, and cannot be changed; the future can be changed.

Most everything in my work indicates we are very, very OVERBOUGHT at this time and, therefore, should have a rather large CASH reserve.  WHY WOULD ANYONE IN THEIR RIGHT MIND THINK THIS? The market is roaring ahead with no regard for risk.just go for those great gains!  The market is quite successfully pointing its finger to the future direction.  But, and this is a very big BUT, IT WILL HAVE A VERY LARGE pull back and much more importantly THE LEADERSHIP WILL CHANGE.  It is very necessary to be able to identify the next leaders (very early).

I believe, and can verify the reasons for same, that the following classes of equities will replace the current fad leaders.  Many of the businesses within these classes have significant participation in the growth taking place in China, India, South America and Europe.  It’s possible to benefit from this growth through multi-national companies, regulated by the SEC, without having the high risk associated with many of the companies traded on foreign exchanges.

1.      Financials

2.      Health Care

3.      Infrastructure build out

4.      Aircraft build out (not new orders)

5.      Heavy equipment

6.      Energy

7.      Consumer non-durables

My projections are that items 1 thru 5 should return between 10 to 12% and items 6 and 7 approximately 8 to 10%.  This will include the dividend and returns that we can utilize by the proper use of certain proprietary option strategies and the general advance of these particular sectors. 

We are currently hard at work to create this situation while keeping in mind the control of risk and preservation of your capital to further realize an acceptable cash flow to cover any cash withdrawals that you might need to make.

It is very important to NOT be the first in water that is known to have sharks therein. It is much wiser to let others "test the waters", find it to be safe, and when they get tired (and EVERYONE does) and decide to all get out at the same time, then and only then is it time for us to get in (having done all the necessary research to minimize risk and make a far smarter and safer entry).

Finally, let me be quite clear I AM EXTREMELY BULLISH FOR THE NEXT 18 MONTHS. However, I am certain there will be a better and safer time to make a total commitment in the next 3 to 6 months and resulting gains will be much greater and, above all, safer than to be totally committed at this time.

There will be many more comments in the next few weeks as this picture begins to unfold.

May you find a fully balanced life in 2007 with PEACE, JOY, PROSPERITY, AND ABOVE ALL HAPPINESS.

Regards,

Jack and all.