Since my last entry, the
stocks fell 538 points Friday and another 588 points today. Let me add on to what I said last week. China’s near recession and drop in its growth
is certainly a big factor. However, we
must take a close look at our own economy as well.
The problems here are
numerous and in my humble opinion offer a further glimpse into what is
happening. There is slow growth in the United
States too. Productivity is off. Manufacturing
is sluggish. Labor participation is lowest since 1980. (Do not rely on the
unemployment figures). There have been a few bright spots in term of recent
housing starts but they do not make up for the lackluster economy. What does this mean to you as an investor?
To begin with, do not sell
now. I know this sounds crazy but if you
sell now you fall into the trap of perhaps buying HIGH and then selling LOW
when in fact you want to do the exact opposite. What you should be doing is taking a
proactive approach and look at your asset allocation. There are other areas that have shown growth
year to date. There are four examples I
can offer, Floating Rate Bank Loans, Government Income funds, Hi-yield
corporate bonds and Short duration Bond funds.
Hey are not as glamourous as stocks but they provide a much needed
function in times like these.
As I said last week, do
not sell now. Take an inventory. Look at
your financial plan. If you do not have
a financial plan, now would be a good time to draft one making special note of
your time frame. Think long term. I have been in this business for 31 years and
I have seen this happen time and time again.
This market will rebound but one must exercise patience.