I must apologize for the couple of weeks that has elapsed since the last edition of the Sterling Weekly. I am in the process of preparing for hip replacement surgery, and as a result my work schedule has been somewhat erratic lately. Due to the fact that there is a good chance my publication schedule will most likely be somewhat erratic, I have decided to make the Prime Stock Newsletter free to the public until July 10th, 2009. I should be more than recovered from the surgery by then and we should be seeing any more interruptions in the publication schedule. If you would like to take advantage of the free subscription offer, please click (here).

So here is a thought on things. As I thought about what to write about in this week's edition of the Sterling Weekly, I was thinking about the volatility in the market and the fact that it appears all the various sector indices I track are most part are moving together in unison. That itself is rather unusual, as typically there are at least a few indices that are marching to the beat of their own drummer. Another interesting observation is that in connection with this the entire market seams to be moving one way or another on what would normally be minor news announcements such a last week's earnings announcement from Lowe's Companies 'LOW'. Well there has to be a explanation for this as rather sudden changes in market behavior don't just spontaneously happen; and I think I know what it is. We are in the most severe recession since the early 1980's combined with the fact that the Obama administration is attempting to implement the biggest expansion of the Federal Government in our history, and most of the people involved in the market today don't remember that recession and don't know how the planned expansion of the Federal Government is going to effect the economy; and as a result they are unsure as to how they should be investing during this recession. So as a result, everyone is collectively jockeying for position until they can figure things out. This uncertainty on the part of the market could also be interpreted as an indication of the markets uncertainty over the future results of the governments actions in dealing with the recession and the planned expansion of the government.

Interestingly enough when I try to answer the above questions and try to figure out what this brave new world the Obama administration is trying to create, I think of my 1st day in Micro Economics class at the University of Colorado in the late 80's. The very 1st thing the professor did when he walked into the lecture hall was to write on the chalk board "THERE IS NO SUCH THING AS A FREE LUNCH!" He made it very clear that this was the 1st and most important rule of economics and we should never ever forget it! In all my experiences since that day, and looking back on my experiences prior, I have never seen that rule broken. There is no such thing as a free lunch. If you think you are getting one, then somewhere, someone else is paying for it.

Back to the market, and indirectly the various sector indices I track. When I look at the economy, and how the Obama administration is attempting to deal with the problems facing it, and the planned expansion of the Federal Government, I can't escape that 1st day of Micro Economics and the rule of free lunches. As a result, I do not think the changes in Washington and the way the problems with the economy are being addressed are going to work out as planned. I think at best we are pushing today's problems forward into the future and there is a very high probability they are going to be far worse and dramatically more costly to deal with then than they are now. So, maybe it is time to think outside the box and start proposing some alternative solutions. So that is what I am going to start doing. However since I don't claim to be the smartest guy in the room, and don't want to be either; I thought I would draw my ideas from history. Specifically I want to ask and propose "What would Reagan say???" How would he approach these and other problems?? His tactics and policies are about as opposite as you can get from what is being done today, and they are pretty much being ignored by the media. So I am going to start tossing ideas out there and see where this leads us. I am going to use the Sterling Weekly and my Blogs as the forum to put these ideas out there, and to answer the criticism of my ideas.

Since the previous edition of the Sterling Weekly, the overall market, as measured by the Dow Jones Industrial Average as declined approximately 1.2%, or approximately 101 points. The Dow Jones Industrial Averages 'INDU' has been essentially tracking sideways since early May, and it continues to look as if the sideways movement is going to continue for the time being. While it is unclear how much longer this sideways trend will continue, I suspect that the reason the market is trending sideways is because it is unclear how the changes to the economy are going to play out. However, once this becomes clearer, I expect regardless of the direction the market moves, the move will be a big one.