Investment Policy Commentary

By Jay Willoughby, CFA, Chief enthronisation Officer, MLIM Private Investors and Ronald Welburn, CFA, Investment Strategist www.mlim.ml.com Investment Policy Commentary OCTOBER 2005 Private Investors MANAGED ACCOUNTS Some general observations Alan Greenspan, Chairman of the national Reserve Board, will be retiring in January 2006 later on 18 years on the job. The general consensus, at least in the financial community, is that he has done a total job of controlling inflation and keeping the economy from undergoing a serious recession. He came to the office at a fractious time, after the stock market scud of 1987, and there was great fear that the economy would suffer accordingly. However, he maintained sufficient liquidity and a distributor point of prosperity followed. There was a minor recession in 1990 link to the first Gulf War and again in 2001 when detonating device spending and corporate profits took quite a tumble (although role did not experience a down quarter). Overall, Chairman Greenspan deserves a lot of commendation for maintaining a long period of prosperity with no study interruptions. The financial markets recognized this prosperity in that a major wangle market which began in 1982 continued after the crash of 1987 and went on with a sloshed uptrend until March 2000.

Since October 2002, the equity markets have again responded positively to stronger stinting growth helped by a combination of tax cuts and complaisant monetary policy. The bond market has also performed well during Chairman Greenspans raise with the 10-year Treasury bond falling from 9.5% just prior to the 1987 crash to 4.3% currently. Chairman Greenspan has always expressed a strong belief in free markets and the fact that prices reflect the push and pull of contend and supply. For example, he has expressed a belief that gold prices will symbol when inflation is getting out of control. If he has erred, it has perhaps been because of the difficulty of transaction with the time... If you want to get a full essay, order it on our website: Orderessay

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