The problem is that easy money policy is not so easy anymore. It never did prop up the U.S. economy, in spite of Keynesian enthusiasm, but at least it created the illusion of economic health by propping up the stock market. Now, it’s unable to do even that.
At some point this year, interest rates should go up. What will happen then to dividend-paying stocks? Because they benefited when fixed-income rates were low, they will dip – and some already have, in anticipation. Over the long pull, however, dividend payers do well.
The stock market is far ahead of the real economy. But the Federal Reserve’s prolonged exercise of keeping interest rates unreasonably low keeps feeding this bubble. In effect, the Fed is keeping the financial markets on a morphine drip.
Expect choppy markets ahead. That’s what we’ve seen lately, and there’s more reason than ever to expect this to continue. Bullish and bearish factors are at war, producing frustrating up-and-down stock market movements.
When Apple replaced AT&T in the Dow Jones Industrial Average recently, all previous performance for this commonly cited investment index became even less relevant.
We are nearing the six-year mark of economic recovery, which started in June 2009. The average expansion since World War II, according to the National Bureau of Economic Research, is just under five years. But the current one, admittedly tepid, should continue for three good reasons: rising employment, recovering housing and stronger manufacturing.
Interest rate hikes lie ahead – and these are a good thing. Fears about them are overdone because they will climb slowly, with an eye on how they affect the economy.
Focusing on market trends is a foolish way to invest – essentially betting that what has done well will continue to thrive. A new book from financial guru Tony Robbins, for instance, looks to the past to plan for the future. We all love, even need, predictability. But depending too much on what’s come before in the markets can turn your portfolio into a train speeding toward a wreck.
Come into a large sum of money? Investing it can seem intimidating. There are countless choices and lots of jargons. Fear not. This article helps you learn about a number of options and tools. So grab your money and invest with confidence.
At some point this year, the Federal Reserve aims to raise interest rates. Trouble is, the rest of the world is going the other way, slashing rates to boost flagging economies. The Fed will have a tough time engineering higher rates, especially longer-term ones, when the global tide opposes it.