| Our Current Market Concern: There is no precedent for what has happened in the United States, and therefore the impact on stock markets is incredibly difficult to gauge. It all hinges on whether investors expect the world economy to take a nose-dive or whether they are confident that a global crash can be avoided. Share prices, after all, are a reflection of a company's value and its prospect of future earnings. Worst case scenario : With air travel severely restricted, and the government burdened with the costs of rebuilding New York and the Pentagon, the US economy could slowly grind to a halt. US consumers, fearing the worst, stop spending, thus accelerating the downward spiral. An already weakened US economy goes into recession, dragging down the rest of the Western world. Developing countries, meanwhile, would be starved of investment and would have not markets to sell their products. The optimists view : But some people believe the attack could actually trigger a global economic turnaround. Central banks have hinted that they will make credit cheaper. Analysts expect further sharp interest rate cuts both in America and Europe. While companies and consumers will find it cheaper to invest and spend, the US government will go on a massive spending program, both to rebuild and to improve its defences.. Taken together, this massive demand should boost the economies in America and Europe, and could set them back on track for global recovery. My MHP Reflection: This is a tragic season in history. We do not want to minimize the personal cost and deepest fears that we as a people and nation face. As a financial advisor, I know that we need to address the financial concerns of the families we serve. I know that people react based on their emotions. I do not want to sensationalize or down play the seriousness of the season. We must have faith and hope in the future. I quote, John Train - "One of the safest times to invest is when the news is awful and markets are depressed: The Time of Deepest Gloom " . We are definitely in a state of gloom. We should not be surprised that markets could go down somewhat. How long, we do not know. Why? We do know why, it's scary out there. I quote Peter Lynch - "If you sell in desperation, you always sell cheap." Warren Buffet long standing advice is - "When the market plummets, neither panic nor mourn". I say, " We must mourn for the people, but not the market" My parting advice is from Stephen Peak " You have to make a decision to buy or sell or do nothing and often doing nothing can be the right thing." Finally the hardest thing to do as quoted from Jim Rogers - " Just about every time you go against panic, you will be right if you can stick it out." These are our thoughts at the current time, I hope they are of value and help guide you through these very stormy waters. Timothy L Ross "Merchant of Hope & Prosperity" " Where Client Goals Become Our Goals" www.timothyross.com |
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