by Archie M. Richards, Jr.
December 31, 2007

This, I regret, is my last column. After 8½ years of weekly publications, it's time to move on.

(I am also a concert pianist. In September 2008, I will give a concert of Beethoven, Liszt, Rachmaninoff, and Chopin at Keene State College, Keene, NH. If the performance is satisfactory, a CD will be available for sale sale on this web site.)

Mitchell writes, "My wife and I bought your recommended investments a year ago. The real estate investment trust hurt the results. We're getting ready to rebalance. Considering the state of the economy and the mortgage industry, we're reluctant to buy more of the REITs investment. What's your opinion?"

No one knows how long the real estate and credit problems will persist, Mitchell. But the more that people feel poorly about an industry's prospects, the more likely it will recover. At 61, Vanguard's exchange-traded fund of REITs (VNQ) is surely a better buy than it was at 85. If it continues going down, just keep acquiring more. Real estate doesn't fall to zero.

On Friday, 12/28/07, 392,000 shares of VNQ traded at an average of $61.54. Those trades were worth about $24 million. That was $24 million of sellers. We know why they sold.

But the trades also included $24 million of buyers. What do they know that we don't? Maybe they're guessing that things will improve. Maybe they'll be right.

Remember that stock prices do not rise after people turn optimistic. They rise at the same time people turn optimistic. Stock prices and the attitudes about them move up and down together. The greater the pessimism, the more likely that the prices, already down, will go up.

Corporate insiders, who are owners and managers of corporations, are privy to information about their own companies that the rest of us are not. Good news: Insiders have become bullish. Their sales have dropped significantly, and their purchases have risen.

When you rebalance, Mitchell, take it for granted that whatever you do will prove wrong in the near term. Assume that if you buy a real estate investment, its price will fall. It you don't buy, it'll rise. Whatever happens in the short term, it's not your fault. Reducing feelings of guilt cuts down on investment mistakes.

You're better off if you don't try to guess how prices are going to move. Just rebalance and forget about the portfolio for 12 months. When you need the money in retirement, you'll have more of it - lots more.

In this final column, I range further afield from Mitchell's letter. The price of oil should fall substantially. Over the last 150 years, oil prices have been subject to wild swings. Considerable time and expense is required to increase production and to make oil usage more efficient. The price of oil remains high for a long time before the supply increases and the demand falls because of new efficiencies. When those goals are realized, the price goes down.

It's absurd to think that the U.S. is running out of oil. The sands of Colorado, Wyoming, and Utah, for example, probably contain 800 billion barrels of oil - more than twice the reserves of Saudi Arabia. Retrieving it will be profitable at $30 a barrel with minimal environment effects. And that's just one region. The world is awash in oil.

Don't feel guilty about using fossil fuels. Fluctuations in the world's temperature, including the current modest warming, are caused by changes in the sun's output of energy. The notion that global warming is caused by man is nonsense. Are you aware that Antarctica has been getting colder for decades and that the width of the ice shield around it is at record levels? The press and the so-called "scientists" who promote global warming consider such truths too inconvenient to mention.

A tsunami of technological advances will continue to improve rates of production, causing inflation to remain low. The long-term investment prospects for America and most of the world are excellent.

I wish you, dear reader, a wonderful New Year and a lifetime of fulfillment and growth.