Speaker To help Vail Valley Investors Play Defense

By Scott N. Miller

July 11, 2008

EAGLE COUNTY — Paul Dietrich thinks investors will be huddling with the bears for a while yet.

With the Dow Jones Industrial Average and the Standard & Poors 500 both down more than 20 percent from their October highs, the stock markets are officially in “bear” territory, after nearly five years of expansion. Dietrich, an economist and the chairman of Foxhall Capital Management, said historically, there’s more drop to come.

“Since 1945, the average recession has lasted two years and the stock market usually drops 34 percent,” Dietrich said.  Dietrich’s picture of the coming months isn’t pleasant.

A Federal Reserve Board report indicates that another wave of mortgage foreclosures may be imminent. The dollar will continue to lose strength against other international currencies because of government spending.

He believes that high oil prices are here to stay, despite some opinions that the current price run-up may be a speculative bubble. The emergence of China and India as industrial, oil-gobbling nations ensures oil will remain an expensive commodity, he said. 

Commodities in general are going up with no end in sight, Dietrich said. And that’s where savvy investors can find good news.  Dietrich is encouraging investors to put money into commodities, a government bond known as a TIP, and companies that do business internationally.  That especially includes food producers.

Only 36 percent of China and India are arable,” he said. “They’ve never been able to feed themselves, even when the staple food was rice. We’re seeing double-digit growth in farm exports, and I don’t see that changing.”

When Dietrich gave this interview by phone, he was getting ready to speak to a crowd of about 2,000 people in Toronto. He’ll be in Vail July 15 at an event sponsored by Investment Advisors International of Denver and Integrity Mortgage of the Rockies in Gypsum.

Steve Hoppin of Integrity Mortgage said he’s looking forward to Dietrich’s presentation.

“We try to teach people a little more about retirement,” Hoppin said. “We try to teach a different way of thinking about money.  In this market, that different thinking involves “playing defense” with money.”

People who know where to invest will be OK, Dietrich said. But it’s time to get into different investments besides stocks.

“The bull market will come back, but until then, you need to invest sensibly,” he said. You can do as well as you would in a bull market, but you have to be properly invested.”

http://www.VailDaily.com/article/20080711/BIZ/991226580