"To be or not to be, that is the question" ... meant to Shakespeare, of course, should I take my own life or not?
Right now, with all that's going on in the world, we wonder the same about the markets, only paraphrased to "to buy or sell, or just hang on?" Dang hard to think about, isn't it?
Wild markets jumping up and down day after day, gasoline still going lower, we are just about panic as to what to do.
Looking at the past to attempt to get a glimpse of what has happened before now, and looking at a chart of the Dow Jones Industrials, we can see many periods that move up and then slowly dissolve bringing prices down. Is that happening now? Are we in danger of repeating the past?
This last move up started about six years ago when after a two-year crash, and a very scary market, we turned around when the banks began to change as the Federal Reserve initiated the infamous QE program. (Quantitative Easing, "an unconventional monetary policy in which a central bank purchases government securities or other securities from the market in order to lower interest rates and increase the money supply.")
The Fed is currently setting out to reverse this strategy over the coming months and years. What happened after they began the program was the stock market slowly began to rise, and we got back on track. Now that they are going to close that down, the market looks like it might follow. Be very careful. The flutter in the markets are telling us something. Be ready for anything. Don't panic, but keep an open eye and ear.
As it happens, around the globe, economies in Europe, Asia, England, and other countries are having a similar problem.
Even this week France is talking about setting up a similar QE. If it worked for us, it might work for them. China has slowed down, but still is a major power.
We are not out of business by a long shot, but it will take time for the other world countries to get back on their feet. This will have an effect on our investments.
What might be an action for us? Here in the United States, I would think it might be smart to invest in the finest, most reliable companies that issues wonderful dividends.
And then have those dividends reinvested in that same company quarterly (usual offering of dividends). Also think about adding more to those good companies. A very good habit to get into.
While there seems to be a difficult market, another piece of information indicates that there are huge quantities of money sitting idly by, just waiting for the right moment to reinvest in domestic and foreign investments.
As these monies are released from their hiding place, and invested in not only existing wonderful, reliable companies, many investors will be seeking out new adventures of upgrading companies, and also those exploratory ones that will advance exciting products which will enhance our daily lives.
Think about how Amazon, Google, Yahoo, and others that bring new and wonderful inventions that have to be invested in by us as providers of money for them to carry out their best products. (The previous mention is not a recommendation, just an example).
In the event that you are looking at investing in bonds, be careful remembering that as interest rates rise, the value of the principal will decrease unless it is a short-term bond. Long-term bonds depreciate in value as the lower interest rate eats up the principal.
Have you seen the price of gold and silver going up?
Until next time ...
Contact Max Frost at Max Frost & Co. Inc., fee-based investment management, (920) 347-9101 or mfrost@new.rr.com.
Article at: 'To buy or sell or just hang on'
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