It would be so easy if we could make an investment decision based on what happened last year, or for that matter, the last ten years. It would be so easy if we could make an investment decision on the most recent news stories coming out of Washington. It would be so easy to make an investment decision if all we had to do was .....
The reality is, making an investment decisions is one of the most difficult decisions you can make. The reason is pretty clear - the future is unknown! But that is no excuse. If you have money, no matter where it is today, you have made an investment decision, right or wrong. What concerns me the most is that I believe many people are making decisions on the current news coming from Washington...AIG, GM, EXECUTIVE PAY, BUDGETS, PORK, TAX POLICY, FINANCIAL REGULATION...and because of that are missing the news that will ultimately have a major impact on our future. This news may be encouraging enough to go "out on a limb" in pursuit of an intelligent investing course of action.
The news that will have the most influence on your investment account is already seven months old. It is starting to have a real and very positive impact on the economy. Here are a few items you may have missed -Common stocks have given a double-digit return since March 9th. In the last couple of months, businesses have increased their spending on long-term capital projects. New home and existing home sales are higher, retail sales have been growing, commodity prices are higher, the dollar is stronger, the savings rate is higher and our President and his team are starting to show confidence and share that confidence with us.
The real driving force behind these overlooked items is the Federal Reserve. It is their actions that will be the driving force for months to come. The Federal Reserve has been creating a huge amount of new money that is finally showing up. The short-term impact of this will be to stop our economy's decline. The long-term impact of their actions will surely be higher levels of inflation. Here are a few suggestions for you to consider. The investment rewards over the next few years will flow to owners of private business, owners of real estate, owners of high quality common stocks, and TIPS (Treasury Inflation-Protected Securities). The losers will be renters, lenders, the owners of intermediate to long-term bonds and bond mutual funds, and annuities with extended withdrawal penalties.
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