Finding the Right Investments in a Sea of Bad News
by Holistic Lifestyles Radio on Sep.23, 2010, under Home
By Dan Ascani
An analyst’s words recently quoted on Bloomberg’s web site rang true. “If the bond market is correct then this recovery could be dead in the water,” he said, referring on June 29 to the plunge in two-year U.S. Treasury Notes to a record low1.
We agree.
The yield on that two-year Treasury issue fell to 0.595% on June 28, the five-year Treasury yield falling to a mere 1.78%. The slowing economy, flight-to-quality buying during the recent weakness in stocks, and deflation are the known culprits behind such low yields.
Although former Federal Reserve Chairman Alan Greenspan once referred to low bond yields as a “conundrum,” not much credit has been given to the bond market for being correct about anticipating the global deflation that has occurred since 2007. Bond traders are commonly thought to be more sophisticated than stock traders, and were right about the current economic environment that rivals any definition of economic depression.
Greenspan was not.
Understanding the Economic Breakdown Yields Options for Successful Investors
Not since 2008 have I been so adamant about encouraging investors and businesses to take immediate action to protect themselves against the severe economic plunge getting underway now. That’s why my April 30 Defending Your Money blog and radio show emphasized the steps investors can take to cushion their portfolios while the stock market declines.
Make no mistake about it: This is no recession. It’s no recovery. It’s the most serious economic downturn since the 1930s.
With stocks reeling once again after their worst quarter since the spring of 2009, a close look at the technical and fundamental reasons for such weakness helps to understand how to build wealth during such tough times. By recognizing which investments tend to do well during stock market routes powered by global deflation, investors, consumers, and businesses alike can improve their odds of preserving – even building –wealth.
So, what are the fundamental and technical reasons for the most recent breakdown in stocks? At the risk of oversimplifying the situation, here are some bullet point reasons behind the collapse: