December 30, 2008 - Several responses to my columns on 2009 expectations and how to invest for the year have been totally negative. They claim I'm too optimistic. The only way to survive is to buy gold. America is finished The new administration is socialism. The American capitalist system is done. These readers are not students of history.

Initially they came from England, but as word spread of a new country with great opportunity, they arrived from Ireland, Italy, Germany, Poland, Spain, everywhere and anywhere. Now they're coming from China, Mexico and the Middle East with many on a waiting list as our shores can't absorb everyone at once. The list is long with great people anxious to be free and to pursue their dreams. They want to be Americans.

There is no other country like ours on so many levels. The fact that every four years the people get to vote for a leader and the vote prevails is still relatively new. Sure, other countries have a democratic system, but America is the strongest, greatest country in the world. How easy it would be to try to become a dictator when you hold the reins of power. Not gonna happen here. Too many checks and balances on that power.

The fact that we just voted in an African American as president speaks volumes to the evolution of the country as more inclusive, more color blind than ever. Equality for all people got a boost from that election. Everyone is waiting to see how well President-elect Obama's policies will work, but the sense is that almost everyone is willing to give him a chance. Maybe some of his programs won't work. Hopefully some of them will. At least, he's willing to try something new.

Sure, those programs will cost money, lots of money. But if the money is invested rather than simply spent, the return in the form of more tax revenues (not necessarily always at higher tax rates) will pay for them. No one wants to increase the U.S. debt levels. That isn't wise. But sometimes, when events conspire to collapse our economic way of life, unusual and extreme measures are necessary. We've had it before, and when FDR took office many cried "socialist", even "communist", because the government was spending huge amounts of money to help the private sector. The WPA (Works Project Administration) put people to work at jobs that seemed made up at the time. There is still evidence of that work today in the form of art, bridges, and roads.

Therein lies the real key to the current economic dilemma: jobs. There have to be jobs so people can collect a paycheck which allows them to spend. And the jobs need to be somewhat secure so that buying a house or a car that requires payments is psychologically realistic. It's not just about having a job. It's about knowing the job will be there so that future commitments can be made.

Once the jobs are created, through public spending as well as through tax cuts for corporations which can then hire more people, more spending can occur. There's some questioning of the wisdom of giving corporate tax cuts, that a better way is to give taxpayers tax cuts of $500 or $1000. That's a short term solution. That money is only a temporary boost for the individual. Better that corporations have continued tax relief to hire permanently. If there were a tax cut for companies, it could be tied directly to hiring. The more people a company hires, the higher the tax benefit.

What does all this have to do with investors? Everything. American investors have always been risk takers, just as their ancestors were when they headed for these shores. Without risk takers, there would be no companies, no capital for growth. Investors still need to be willing to risk their investment dollars, only now they need to be cautiously risky. This is not the time to bet on an idea with lots of sizzle. Now investors need to focus on stocks that are more than surviving. They're thriving in a difficult time. When the economy recovers, they most likely will do even better.

And diversification is still needed. Buying gold or real estate is probably a good idea, especially if inflation comes roaring back after all the government expenditures are in the system. But keep them as part of a full investment portfolio. Stocks and bonds are important parts of any successful investment strategy, even if stocks were pounded this year.

This past year was rough, but like one robin doesn't make a spring, one bad year doesn't make forever. Look back at history, both economic and political, especially in the United States. We're a nation that goes to extremes, pulls back and then rallies ever higher. And I have every faith that we will again. Hey, this is America.

- Ted Allrich