For those of you beginner investors out there wondering what going on in the last two weeks of the political games, economic turmoil and the 16% decrease of the DOW, I have to tell you that even some veteran investors and traders are doing the same thing. What happened today on Wall Street was just a slap to the face after the wake-up call from Standard and Poors on Friday, letting Washington know that it’s time to do the right thing.
After months of debates and meetings to consider raising the debt ceiling, politicians (both Republicans and Democrats) waited until the last day to actually write the bill and vote on it. Even after all the compromising and dealing that went on, the bill is nothing more than allowing the federal government to spend more money than it has in the past.
Standard and Poors released a report Friday night announcing the downgrade of the United States credit rating from “AAA” to AA+” with a negative outlook. What bothers me more is the “negative outlook” comment than the loss of triple “A” rating status. Never in the history of the united States has the credit rating of the country was anything but triple “A” but to say that you (S&P) expect more negative issues to occur later on down the road. This morning S&P downgraded Fannie Mae and Freddie Mac as well as urging Washington to get their act together now or another possible downgrade can happen within the next two years. Washington’s demonstration of lack of solid reform ideas and true leadership skills to do what is necessary, has shown the world not to have confidence in the United States
So where can you invest your capitol so you don’t take a beating any more than you already have during the past four years? That is up to you. I can only suggest investments strategies or ideas that I believe to be the right choice. I’ve talked about this day coming for about ten months and how I’ve protected myself against this economic correction. I know there are quite a few of you readers out there took some of my advice and you’re happy you did. Especially since I’ve been talking about owning gold, silver and other precious metals to hedge against the loss of value in the dollar as well as equities on Wall Street. Gold has hit it’s all time high of $1,728.37 while silver held within it’s usual price range of $38-$40. While precious metals have climbed a great deal over the last year, analysts feel that gold isn’t done making new highs. Some feel this is the time where silver is going to gain traction to fall more in line with gold prices. Traditionally silver-to-gold prices have been a 16-to-1 ratio. With that in mind, silver should be trading at $108 per ounce.
I don’t expect anything good for to really happen to take us out of this recession for at least a year. As it is, Congress is on their five week vacation and Obama is still blaming others while trying to say that tax reform and medicare reform are the answer to economic prosperity. Until the federal government gets out of the way and lets the free market to do what should have happened in 2007-2009, before the bank and auto bailouts, we will continue on this path of no growth.
So invest wisely and tread lightly.
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I think this is something that a lot of young people are wondering, how to invest during the downturn. I graduated college in 2010 and got a job, so the first time I had some money of my own to invest was during the recession. I’m still wondering the best strategies to take, though, so I was wondering if you had any updated suggestions?
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Sadly, I agree with you. Its not going to get better any time soon. I see gold as more of an insurance rather than growth at this time.
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