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Pendulum financialeconomicsexplainedus POSTED 10092019 The Stock market as well as the overall economy moves between a boom and bust cycle - it basically moves between growth and value investing - it is that simple! After a recession when the whole stock market cycle the business cycle and the credit cycle have gone bust interest rates are low to super low the Fed is trying to stimulate the economy - Investors start to look at Growth Stocks Growth-Oriented Mutual Funds a growth stock is one that generally averages about 20% growth per year along with the technology sectors like semiconductors and BiotechPharmaceuticals… Small Cap stocksMutual Funds also take off - money is cheap to borrow to fund R&D marketing expenses etc But Value stocksMutual Funds also start to rise A RISING TIDE LIFTS ALL BOATS - was the 90′s moniker! Hence the market starts to take off as markets start to heat up and the economy starts to OVERHEAT - the Fed starts to raise interests to COOL the market down - like in November 1999 - the Fed had raised the Federal Funds rate way up to a whopping 65% to try and cool down the economy and to put a damper on the Dotcom Boom - fueled stock market! Those who forget history do not recall that the yield curve inverted in 1998 the Federal Funds rate was too high in 1999 FYI side note the “average” technology mutual fund in 1999 was up 100%!!!!!!!!!!!! by years’ end Guess what? The whole market crashed in April 2000! So from that time to about mid-June 2000 - the market went nowhere! Value investing and investing in Bonds like Intermediate and Long-term Treasury Bonds backed by the full faith of the US government went up from June 2000 to December 2000 Berkshire Hathaway A shares went up over 85% that year within 6 months! Warren Buffet? Look him up! Treasuries also did extremely well - like one “Talking Head” has been quoted as saying - “There is always a Bull Market somewhere”…… And the whole process starts over again from a boom to bust cycle about every 10 years or so……the Real Estate Market moves in a boom to bust cycle about every 7 years… MY OPINION – stay the course with Value-oriented Investing it works in both up and down markets! A mix of Value Mutual Funds and Treasury Bond Mutual Funds weather ALL storms - OVER THE LONG HAUL - and yes expect a few hiccups along the way too LOL!…Exchange Traded Funds ETF’s investing will work too - but I like Mutual Funds - the minimums are $300000 however at least to start investing in a SINGLE fund DO YOUR RESEARCHDUE DILIGENCE ON THE WEB and also on YOU TUBE! Guys - the overall stock market climbs in a stair-step fashion up then sidewaysdown and then up again! Invest for the long term like 30-50+ years…YOU WILL BE A WINNER! Be it an investment account or a retirement account or BOTH like a personal investment account and a ROTH IRA or an employer-sponsored 401k Plan along with a personal investment account Dollar-Cost Average your contributions to personal investmentROTH accounts that is invest the same $ amount each and every month - regardless whether the market is up or down! Ignore the noise! Ignore the Talking Heads” CURRENT MARKET MY OPINION Me personally I am accumulating cash and letting my current investment portfolio just ride along with this geo-politically fueledbaseless rate cut economic environment …Impeachment talks China Trade War escalation Iran concerns Saudi Arabia bombings Japan-South Korea tensions as well as renewed North Korea tension over prior failed talks the American Farmers plight due to the trade war negative returnyield rates on European Bonds Brexit concerns a dollar that is too strong etc When American companies start to cut back lay people off these people can not keep spending to keep GDPthe economy growing then these people can not pay their mortgagesauto loanscredit cards…Will it be “somewhat” similar to 2008… all over again? I have no professional opinion nor do I have a crystal ball – Maybe the FED will engineer a “SOFT” Landing”…this time they never did in the past when “Bubbles” Greenspan or “Helicopter Ben” Bernake were FEDERAL RESERVE CHAIRMEN THOSE THAT FORGET HISTORY ARE DOOMED TO REPEAT IT… Flash Meme
@ 34 likes ON 2019-10-21 07:12:55 BY
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