Confusion & The Counter
The economy can get better. The economy can get worse. News headlines create confusion. Education is the counter.
Here you go,
Roya Wolverson sums it up well in the 8/29/11 issue of Time. Low interest rates, 24/7 media coverage, and headline scanning will confuse the heck out of the best of us.
“The market’s wiring is all mixed up.” The downgrade of US debt should have made them less appealing to panic sellers seeking a safe-haven. It did not. An extremely odd announcement from Federal Reserve about keeping rates low until 2013 caused stock market pessimism not optimism. Extreme political views on both sides keep news (if you can call it that) headlines using only emotional and scary tactics.
Roya’s article can educate. The following are facts. Educational and useful facts from page 14.
The Counter (Education)
Dollar falls = lower interest rates make holding dollars less attractive
Exports rise = as the dollar falls, US goods become cheaper abroad
Imports fall = foreign goods become more expensive, trade gap closes
Commodities = their prices rise when foreign investors avoid dollar
Inflation = cheap dollars drive up foreign currencies and inflation*
* Japan is under pressure to intervene with Yen strength because they need to export too.
We are all in this together. Panic, prejudice, and paralysis don’t work.
Investors should stick with their plans and work closely with their advisors.
Until next week,
Susan R. Linkous
Securities and Financial Planning Offered Through
LPL Financial, A Registered Investment Advisor
Member FINRA and SIPC