Recent Press Releases

'This Time It's Going to Be Different!'

SPOKANE, Wash., Feb. 5 /PRNewswire/ -- Investors have been conditioned over the last 20 years to expect a stock market that goes through minor corrections before continuing up in a never ending climb toward greater and greater riches. They've been led to this belief as the result of a convergence of several economic factors that took place creating the longest running bull market in history. However, we are now entrenched in an economic climate where historically gross excesses exist at a time when our ability to deal with serious problems is in question.

Jim Shepherd, founder of The Shepherd Investment Strategist ( http://www.jasmts.com ), says that 1982 was the beginning of an investment scenario created by a combination of circumstances that is unlikely to ever be repeated, certainly in our lifetime. Following a period of high interest rates that were used to defeat the inflation problems of the 1970s, a 20-year decline in interest rates began. This signaled the start of a new bull market, and as interest rates fell, investors continued to refinance and re-mortgage at lower and lower rates. Instead of saving or lowering their debt, they increased debt by buying larger homes, extra vehicles, vacation properties and by throwing money at the stock market with no concern as long as the bull was alive. In the mid 1990s two elements of the greatest investment bubble in history were falling into place as investors discovered internet stocks and Wall Street convinced them that valuations of companies like Amazon.com, Nortel Networks, and Lucent, no longer mattered in the new economy. In 1998 two of the final investment gifts were handed to Americans when the Asian economies collapsed. This led to a massive flight-to-quality flow of foreign funds into our already overvalued equity markets and allowed us to keep spending our new found wealth on even cheaper foreign imported products.

However the beginning of the new millennium brought a new bear market and a recession, and now the world edges closer to a deflationary economic spiral. Illiquid companies are collapsing, forcing workers into unemployment lines with little hope of finding new jobs. Those without savings will be forced to sell assets into falling markets that will further depress prices, and so the spiral continues. They'll sell stocks, vacation property, and extra vehicles and eventually start visiting neighborhood pawnshops as they struggle to make minimum payments on credit cards. Although the crash in 1987 was predicted by Shepherd's Model, it was obvious to him that the effects would only be temporary since the economy was still strong and earnings were rising. That market recovered six months after the crash, but it's Shepherd's contention that, because of excessive debt levels, rapidly falling profits and expanding worldwide economic downturn, "This time, it's going to be different."

About The Shepherd Investment Strategist: Based on a market-forecasting Model created by Jim Shepherd in 1982, the company provides advice about approaching major directional changes of U.S. markets. The Model has never failed to correctly forecast a change. The service advises clients and subscribers around the world on the timing of and the entry and exit of various asset classes including stocks and bonds and occasionally on real estate and precious metals. The Shepherd Investment Strategist is a Service of JASMTS Inc.


Excerpt from a Business Examiner Interview

The South Sound Business News Resource
Serving Tacoma/Pierce County, Federal Way, Olympia and South Puget Sound (Washington State)
October 15, 2001

South Sound may weather recession better than most.
By Steve Dunkelberger
Business Examiner Staff

    South Sound appears destined to escape the severest effects of the current recession, according to local and regional analysts. “I think they are going to be fairly insulated from this,” says Jim Shepherd, founder of the Spokane-based Shepherd Investment Strategist. “It’s not going to be the boom and bust cycle experienced by other areas.”
    This pillow comes about because of the higher-than-average number of government jobs in South Sound cities, Shepherd explains. Those jobs are more recession resistant than private sector jobs. And many people who’ve held those jobs and hold them today apparently are among those sharing their good fortune with the rest of the country in the wake of terrorist attacks on New York and Washington, D.C.
    The impact of patriotism on Wall Street has been seen in the buoyancy of stocks since the market reopened in the wake of terrorist attacks on New York and Washington, D.C. But you have to be at grassroots to witness the patriotism itself.
    “I had never seen anything like it,” says Patrick McClelland, executive vice president and investment services manager at First Community Bank Financial Services in Lacey. “We had half a dozen folks call up between the first Monday and Tuesday after this whole event. They wanted to buy stocks to be patriotic.”
    “I took 99 percent buy orders,” Edward Walsh, broker at Edward Jones in Olympia, says of activity the week after the terrorist attack. “I don’t think everybody was doing it out of patriotism, but there were some.”
    The market dropped in the days immediately following the market’s reopening the Monday after the terrorist attacks, the brokers conceded, but for the most part, the losses were more than made up for by the time the United States retaliated with bombing strikes on Afghanistan Oct. 8. It appears the sell-off was mainly by large institutional investors, says Walsh.
    Those who stepped in to help pick up the slack have far fewer resources than the institutional investors, he adds.
    “These were not wealthy folks, for the most part,” he [sic] says Walsh. “These were mom and pop.”
    The stock market at press time was within 5 percentage points of where it was before Sept. 11, McClelland notes.
    “Defense stocks are hitting highs,” says McClelland, “Airline stocks have not recovered much yet, but Boeing has rebounded $9 from its low. That’s good news.”
    Investors should remember that after every downturn is an upturn, says Walsh.
“The question is when,’”, he adds. “I get asked about Boeing. It’s a good company, even though it has had to lay off 30,000 workers. Its main competitor is a company whose employees work 32-hour workweeks and get six weeks of vacation every year. Why would Airbus ever be No. 1?”
    The attack of Sept. 11 and the recent military strikes have changed the expectation for the nation’s business climate in the current and up-coming quarter, but the long-term outlook for the U.S. economy remains very positive.
    Experts in the world of finance forecasted the coming recession months ago. The terrorist attacks and military actions that followed simply sealed the deal.
    Shepherd says he began seeing sign of a slowdown more than [a] year ago. He also warns that the debt levels saddling public and private sectors could drag it out longer than necessary.
    “I don’t think we are going to see anything long-term like we did in the ‘80’s,” he says. “But I think we will see at least a year of a sluggish economy.”
    A decisive military resolution to the current hostilities and a massive stimulus package could speed things up, he concedes but neither investors nor traders should expect the economy to spring back immediately.
    “That is not going to solve the underlying problems in the economy,” he says. “These things always take longer than people plan.”


The Shepherd Investment Strategist: No Signs of A Crash ... Yet!


SPOKANE, WA - July 16, 2001 -- Although we are starting to hear the "C" word lately in the financial press, prominent market strategist Jim Shepherd says the stock market is not ready to crash, yet. And Shepherd, founder of The Shepherd Investment Strategist (http://www.jasmts.com), should know because he was one of a very few who accurately predicted the timing of the 1987 crash.

Using a Model that he created in the early 80s, Shepherd advised his clients to exit this stock market in late 1999 when it became apparent that stocks were soon going to fall. Although his Model is presently showing a very high reading, it has not yet reached a point at which a crash would be imminent. Shepherd says that some of his busiest days came during the March-April 2000 sell off, on days when the Dow was down over 500 points. His office was kept busy fielding calls from worried subscribers wanting to know if a crash had started. He calmly reassured them that his Model had not yet reached a high enough level and the criteria was not in place for a crash to take place. But in hindsight his advice to sell all stocks has saved his clients from one of the most dangerous stock markets in history.

Shepherd's Model monitors a variety of statistical data that will have an impact on the economy and the stock market. He says that the current deceleration of the economy is happening at a quicker pace than at any time in the last 20 years. Shepherd's Model reached a high enough reading in 1987 for him to warn his clients to sell all stocks 41 days prior to that crash. His Model then gave an imminent crash warning 21 days before the October 19th collapse. In 1987 the economy was much stronger than it is today and current world economic problems were almost non-existent.

According to Shepherd, today's relatively low unemployment rate has not yet started to reflect the full extent of massive layoffs announced or presently planned by companies struggling with rapidly falling revenues and earnings. Shepherd expects that unemployment statistics will start to alarm investors in the near future. Layoffs are coming at a particularly difficult time when debt in America is at an all time high and defaults are setting new records each month. The fact that corporate bankruptcies, as reported by Moody's Investors Services, have just set another record for the first six months is indicative of some of the other problems we face. They expect corporate bankruptcies to set new records for each of the next 2 years. This is further evidence that we are closer to the beginning than we are to the end of an economic correction.

Falling earnings for mature companies like Dupont (NYSE:DD), Minnesota Mining and Manufacturing (NYSE:MMM) and Marconi (NASDAQ:MONI) are signaling a serious global slowdown in sectors other than the techs and Internet issues like Microsoft (NASDAQ:MSFT).

So for now, we as investors, can take comfort that a stock market crash is not going to happen in the near future without warning. But if Jim Shepherd's Model reaches a high enough reading, all bets are off.

Forget About Inflation, Deflation Is The Real Enemy Now!

    SPOKANE, Wash.--(BUSINESS WIRE)--June 18, 2001--If you are paying higher prices at the gas pumps and receiving higher utility bills in the mail, you're not alone according to Jim Shepherd of The Shepherd Investment Strategist (http://www.jasmts.com). But Shepherd says that while those may seem to be inflationary signals to the casual observer, the economy is in such poor shape that the rising wholesale and retail costs normally associated with inflation are present only in the energy sector.
    In fact, Shepherd, who is one of the world's highest compensated investment advisors, sees similarities between Japan's very serious financial problems and our own. Japan's economy has been sinking to new depths for ten years, despite continually reduced interest rates in that country. Lowering our rates probably will not solve problems in America either.
    Shepherd says that we have a rapidly slowing economy that is being led by a fierce contraction in the manufacturing sector. Layoffs that started there are now quickly spreading into other parts of the economy including service and retailing. Under other circumstances laid off workers could expect to find new employment in a reasonable time period, and could fall back on their savings to help bridge the gap. However, new jobs are not being created fast enough and US savings rates are now negative. A rapidly rising jobless rate and personal debt levels that are now at record levels have left millions of American families now unable to pay credit card and mortgage obligations on time. Many are facing personal bankruptcy.
    Shepherd points out that both inflation and deflation are unwelcome to stock markets, but the degree and the rate of deflation that is appearing should be of particular concern to investors. Analysts and brokers who are encouraging investors to buy on market weakness could soon find their clients caught in a downward deflationary spiral that may result in some big name stocks like General Motors (NYSE:GM), IBM (NYSE:IBM) or General Electric (NYSE:GE) being cut in half.
    The Shepherd Investments Strategist provides a weekly market advisory to its subscribers and currently has a courtesy audio update for the public each Friday until July 6th 2001, by phoning 509/444-6444 or on Real Audio at a special site (http://www.jasmts.com/special).
    Shepherd's subscribers are currently awaiting his proprietary Model's next signal, indicating either an imminent significant drop in the stock market or an "all clear".

The Shepherd Investment Strategist: The Stock Market Can Only Ignore The Economy For So Long!

SPOKANE, WA - May 23, 2001 -- Prominent investment strategist, Jim Shepherd, says the stock market can't ignore the economy indefinitely and he expects the markets to turn down again when it becomes clearer to investors that the future for stocks is not what is currently being presented.

He cites as an example the current stock market rally that was started after unexpectedly strong GDP data was released for the first quarter. The data showed a surprisingly strong reading of 2% growth against an expected reading of 1%. Shepherd points out that the GDP number is frequently subject to revision after the data has been compiled and computed accurately. His calculations indicate that we will probably have a revision that is much lower than the previously reported number. When everything is taken into consideration, according to Shepherd, the economy will be reporting anemic growth that may be bordering on negative. He says the chances of the economy entering into an official recession have been showing up in several sectors during the last year.

Week to week unemployment numbers, which are also subject to manipulation by the Labor Department, are frequently revised at a later date. However the long-term unemployment trend is clearly rising and is indicating that the economy is slowing rapidly. When combined with falling sales of autos, airplanes and technical equipment it is unrealistic to expect we are still in a strong and growing economy that should be reflected in rising stock prices.

The current multiples of stocks still remain at levels that are beyond historic norms and are more in line with expectations of a strengthening economy than one that is clearly slowing. And falling earning reports do not reflect an improving climate for stocks.

As the founder of The Shepherd Investment Strategist (http://www.jasmts.com) and a veteran investment advisor with many years of experience in the markets, Shepherd is telling us that regardless of what we hear from Wall Street, bottoms in the stock market do not happen like this. He warns that going back into stocks when the fundamentals of the market are against you offers very poor risk/reward and could have disastrous results. Shepherd says that his prime goal for his clients and the subscribers to his newsletter is to preserve their capital during uncertain times and to profit only when it is safe to do so. He advised them to sell all stocks late in 1999 when the Model that he developed in the early '80s indicated that a troubled stock market lay ahead. Their portfolios have been safely growing in long-term government bonds since that time. Shepherd's subscribers are currently awaiting his proprietary Model's next signal indicating either an 'all clear' or a further significant drop in the market.


Inter-Meeting Rate Cut Signals Economic Problems Announces The Shepherd Investment Strategist

SPOKANE, Wash. - April 19, 2001 -- The Federal Reserve's unexpected half-point cut to the federal funds rate target yesterday gave the Nasdaq and the Dow Jones industrial average much-needed gains, but one prominent market strategist is warning investors not to get bullish just yet. Jim Shepherd, founder of The Shepherd Investment Strategist (http://www.jastmts.com) and a veteran investment advisor with nearly 20 years' experience in the markets, said today that the Fed lowered the interest rate outside of its regularly scheduled meetings because previous rate cuts have been unsuccessful in heading off the possibility of a recession.

Shepherd added that yesterday's rate cut should come as no surprise to those who are watching the performance of the economy rather than the performance of Wall Street in the financial media.

"This is the Fed's way of saying that the economy is continuing to slow very rapidly in spite of previous attempts to halt the slide, while world economic slowdowns are beginning to have a negative effect here at home and a negative wealth effect is now being reflected in a declining business outlook," said Shepherd.

Although the rate cut will undoubtedly have another short-term positive effect on the equity markets, Shepherd pointed out that this action underscores the inherent and growing economic problems faced by the U.S. "This should be viewed as good news only in the short term. In the overall scheme of things, however, this move is indicative of the concern of the Federal Reserve over growing problems in the economy," he said. "Increases in the retail prices of gasoline, electrical energy and natural gas are having an inflationary effect on the economy that has not gone unnoticed by the Fed. The combination of these inflationary pressures, a slowing economy and rising debt problems has to be particularly disturbing to the members of the Federal Reserve, making their decisions increasingly difficult."

Compounding the problem, the Federal Reserve Bank of Cleveland reports that the average consumer is now carrying a monthly credit card balance of $5,800 - which means debtors making only minimum monthly payments would take over 30 years to pay off their credit card debts. Credit counselors and bankruptcy trustees in many states are seeing a dramatic increase in clients coming to them with serious debt servicing problems.

"The amount of debt, currently at an all-time high, has to be another concern of the Fed," said Shepherd. "In the last few years the public has, in many cases, been mortgaging their homes up to 125% of appraised values to continue a wild spending spree. The downside of that spending is now showing up in a rapidly increasing debt servicing problem."

Shepherd predicts that rapidly rising layoff statistics will soon start to show up in the unemployment numbers that have been fairly benign to date. "The Fed is no doubt alarmed by several factors that are now starting to show up in the economic data it is examining," he said.

Shepherd himself has seen positive gains in the slowing economy, having advised subscribers of The Shepherd Investment Strategist in late 1999 to exit the stock market and to purchase 30-year T-bonds - avoiding the large-scale losses in the stock market carnage that followed and increasing their portfolios by an average of 23% through the end of February of this year. Shepherd's subscribers are currently awaiting his proprietary Model's next signal indicating either an 'all clear' or a further significant drop in the market.

This page last edited
February 05, 2002