Last week I attended an investment conference in Nebraska. I have been to this meeting many times in the past 10 years. This year it was different. Most of the discussion was about protecting assets and providing safe income that would last forever.

Here are a few of my observations from listening to the experts:

• We have been through these types of stock market downturns and surges before, and we will see them again.

• The two times that most resemble the state of the U.S. economy in the last 24 months were in 1930 and 1981. Presidents Roosevelt and Reagan handled the respective recoveries differently. In both cases, we came out of the troubled period with flying colors.

• Our national debt is high, but it was higher after World War II. The solutions to reducing the debt were higher income taxes and a workforce willing to work hard. We will probably see the same solutions at work this time. Higher taxes are inevitable.

• Investors need to live within their means. Excessive personal debt robs individuals and families of their freedom. The strain of excessive debt destroys good judgment and forces people into corners they want to avoid.

• The next wave of mortgage loans resetting will not cause another massive real estate drop. Banks will likely renegotiate with borrowers and more borrowers will be able to stay in their homes.

• Commercial real estate problems usually lag behind residential real estate problems. However, the commercial real estate market is only one-third the size of the residential market. Commercial real estate loans were not securitized like residential loans and therefore may not face the same problems as residential loans. Some regions will suffer but not all.

• There is little pressure to increase interest rates in the short term. Interest rates should stay relatively low for the next 24-36 months.

• Deflation doesn’t look like a huge problem. Commodity prices are relatively stable and the risk of significant deflation is minimal.

• The U. S. gross domestic product will increase, but modestly, in the next few years. The consensus is about 2 percent per year.

• Emerging market economies will continue to rise. The anticipated growth in GDP is 5 percent, making the stocks in these countries particularly attractive to investors.

In summary, investors who are living on their investment accounts need to revisit their budgets and, if at all possible, withdraw less. Investors have learned that they need to be more realistic about their portfolios’ performance. Now more than ever, portfolios need to be broadly diversified and the markets will rebound.

Some investors suffer from “stock market fatigue” and should reduce their exposure to the incessant bombardment from the media.

Notable Quote: Spouse asks, “Will you still love me if I lose all our money?” Response, “Of course, I will still love you. I will miss you, but I will still love you!”

Call or write Tom at 1030 Seminary St. Suite D, Napa, CA 94559, 254-0155, fax 254-0158 or e-mail suntrm@aol.com.