Five Market & Economic Calls
That Have Made a Difference

When I first started PROFIT CONFIDENTIAL back in 2001, we were sending it to about 1,000 people; friends and customers of Lombardi Publishing. I was writing the issues alone. Today, we get as many as 2,000 people daily signing up to get PROFIT CONFIDENTIAL; it has gone “viral,” as they say.

We never started out with the goal of becoming an Internet company like Amazon or Google. We’re just a group of stock market analysts and economists that like writing and sharing our ideas about the markets and the economy.

Writing a financial daily e-letter is not easy. I wake at 4:30 AM EST each day we have an editorial issue. George and Mitchell work late into the night getting their morning articles ready. Wendy needs to edit each issue first thing in the morning. Joey needs to insure the issues get out on a timely basis.

I love sitting down to write PROFIT CONFIDENTIAL each morning, because I believe we present a contrarian view on the markets, investments and the economy that our readers can truly benefit from.

Some of my friends ask how can you think of so many different things to write about, almost every morning, 10 years running? My answer it that, with this global economy, there is so much happening at any given time, there actually isn’t enough time in the day to write about everything and to present our views on all of it.

As you know, we offset the cost of producing PROFIT CONFIDENTIAL with advertisements for financial newsletters and services produced by Lombardi Publishing, a company I started back in 1986. With an MBA in International Finance (a CFP from years ago), and almost 30 years of investing experience, I’m often asked to write financial plans for individuals. I’ve been offered as much as $50,000 for a financial plan, but I always decline, because I simply don’t have time. I do not want to take away from what we do here at PROFIT CONFIDENTIAL.

On these pages, we’ve had some great calls over the past decade. I would narrow it down to about five major forecasts that made a difference:

  1. Turning bullish on gold bullion in 2002;
  2.  Telling our readers to get out of the real estate market in 2005;
  3. Being among the very first to predict a full-blown recession
    (we did that in 2007);
  4. Turning bullish on stocks in March of 2009;
  5. Dumping long-term bonds in the late summer of 2010.

We are blessed to have a stable of fine editors and analysts that have made these spectacular predictions and forecasts. We are as equally blessed to have so many readers flocking to PROFIT CONFIDENTIAL daily, because, without them, our predictions and forecasts (which are usually contrarian) would go unheard.

We thank you for taking the time to read the issues and we hope our ideas, predictions and forecasts are making an honest difference for you in how you invest your money and how you adapt to today’s quickly changing financial environment.

Where the Market Stands; Where it’s Headed:

The market has been up in seven of the last eight trading sessions. After being down most of yesterday, the market popped in the last hour of trading to give us a gain for the day. Someone wants this market to move higher.

Every day I wake up and ask: Is the rally tired? Is it over? After all, stocks are up about 80% since March of 2009. The year 2011 has been a great year to be invested in stocks so far. So what do I do? I just do what the market tells me. As long as the stock charts show rising prices, as long as the Federal Reserve keeps money easy: I don’t fight the trend; I don’t fight the Fed.

Until the market tells me differently, stocks are still a good place to be today. Short- to long-term, it’s a different story. I’m not bullish for the remainder of 2011. For me to really turn bullish on stocks for the entire 2011 year, long-term interest rates would have to come down, our deficit would have to be down to under a trillion a year, stock market advisors would have to turn bearish on stocks, and the Fed would need to raise the Federal Funds rate to one percent. I don’t see any of those things happening anytime soon.

The Dow Jones Industrial Average opens this morning up 5.7% for 2011.

What He Said:

“Overbuilt, over-speculated, over-financed and overdone. This is the Florida real estate market right now. For those looking to buy for personal use or investment, hold off! The best deals are yet to come. I continue with my prediction that the hard landing in the U.S. housing market, which is now affecting lenders, will have significant negative effects on the U.S. economy.” Michael Lombardi in PROFIT CONFIDENTIAL, April 3, 2007. Michael started talking about and predicting the financial catastrophe we began experiencing in 2008 long before anyone else.

“If the U.S. housing market continues to fall apart, like I predict it will, the stock prices of major American banks that lend money to consumers to buy homes will come under pressure—these are the bank stocks I wouldn’t own.” Michael Lombardi in PROFIT CONFIDENTIAL, May 2, 2007. From May 2007 to November 2008, the Dow Jones U.S. Bank Index of the world’s largest bank stocks was down 65%.