There has been a great deal of talk in regards to the government shutdown and what exactly the markets will be doing over the coming weeks and months. The bull market we experienced during the first half of 2013 has hit some much needed resistance in reacting to the government shutdown along with the debt ceiling crisis and whether or not the Federal Reserve will continue with QE.
No one knows exactly how this will ultimately play out. Truthfully, the more likely resolution to this temporary shutdown will be an immaterial solution that fails to solve anything long-term and merely kicks the can down the road another time. It was not that long ago when the government was facing the same issues and problems which they cleverly covered up and since then we’ve seen stocks climb to new highs. The question now is: how long will this whole thing play out until we have another bubble? Or even worse; we could see a collapse if things continue up the ramp we’re running on the side of a cliff.
Today, stocks are soaring with the Dow up 300 points because some ‘sort of’ potential resolution to the debt has been brought to the table and this for some reason brings some sort of short-term optimism that merits a rise in stock prices. The truth is, when people feel confident, people go out and spend more than they do when they are feeling hopeless. Believe it or not, this non-tangible emotion actually effects stocks prices, hiring, and the flow of the economy.
Big news was just released that Janet Yellen will now be one of the most powerful woman on earth. She is President Obama’s choice for who will take over the Fed with Ben Bernanke ending his term as the Fed Chairmen in January 2014. Janet Yellen is now responsible for fulfilling the dual mandate of the Fed, which is to keep inflation in check and keep employment reasonable.
It is no surprise that Obama elected someone that will attempt to make him look good by keeping the bubble machine on cruise control with artificial economic steroids. She has an extremely liberal track record and will most likely continue and/or expand QE while she takes reign as the Chairman of the Fed. In fact, those who are worried about tapering ’cause their stocks might correct a bit should be put at ease knowing who is going in to replace Helicopter Ben.
What You Should Really Worry About
When it comes to absolute safety; there is no such thing. Someone could be so overly prepared for the world to end and get into a fatal car accident on the way to the grocery store during perfectly normal everyday conditions. Preparing for worst case scenario all the time because you think Obama is the Anti-Christ and/or America is destined to collapse is going to be a never ending task that prevents you from living your life now.
Realistic practical worries that pertain to you today!
You should have a plan to have yourself and family out of debt in the foreseeable future.This is especially true if you are thinking about retiring in the next decade. I see many people who have let life pass by without any plan or regard for how they plan to exit their job and enjoy a comfortable retirement. What is almost as sad is to see kids, who hardly know any better, in college, racking up credit card and student loan debt and then crumble under the burden they got themselves into; with or without that degree they were working for. For many, it takes literally years to ‘get ahead’ in life and this restricts their potential to invest and be successful now. Although, I feel like the urgency is greater for upper middle-aged individuals to get rid of bad debt, people of all ages should strive to be as debt-free as soon as possible to minimize the consequences of a real economic downturn.
Once you’ve got your financial house in order, the next question to ask yourself is have you begun to invest wisely? This is another reason why someone will feel extremely concerned and dependent on a government meltdown. Are you correctly diversified and more importantly, are you invested in the right securities? These are both serious questions that you need to ask yourself and come to terms with to know how to proceed. Many people invest blindly and put their trust in someone else without actually being educated themselves on what it is they are investing in. This is a situation that can bring about great insecurity. My recommendation would be to make sure you have some metals, undervalued stocks, and real estate to give you the best chance of a government default. My portfolio revolves around these three investments along with some other specialized investments. My biggest worry in a financial collapse scenario would be the U.S. dollar devaluation and having too much of my resources in cash.
Are you properly insured? The number one reason someone goes bankrupt, according to the Dave Ramsey team, is that they were under-insured in an unforeseeable event that suddenly came up and wiped them out. Make sure you aren’t just looking for the cheapest insurance premium and understand what sort of coverage you have in case of a drastic event that you cannot afford to pay out of pocket all at one time. If you are starting out and do not have any assets, this is much less of a concern because there is nothing that someone can take away from you and you won’t be going to jail if you cannot pay your debts. However, it is still a good idea to be covered.
The last thing I would consider is what are you currently doing to invest in yourself to make one step forward for your future. I don’t believe that there is a cookie cutter answer for everyone to be successful in this world. Happiness for one person is going to vary greatly from another’s. On a quick side note, if you don’t know how to be happy now with what you have you may never learn to be happy when you reach your “destination.” But having said that, there is a sense of achievement that brings joy when you advance and overcome that I suggest everyone pursue no matter how old you are. Everyone needs to evaluate what it is that inspires them and pursue it in the best way that suits them. Your goals for business, work, spirituality, and pleasure are unique and need to be nurtured. If you are too caught up with the mainstream headlines and the end of the world, chances are you may be sidestepping personal investment in yourself in the here and now.
Have a laugh!
It’s important to understand the big picture and plan your life accordingly, but do not allow this to put your life on hold. This was a funny video that was released a couple years ago that still applies to our exponentially expanding debt. We will always feel like we are climbing a wall of worry as long as things continue out of control, but life will still have to go on.
A followup video released recently; though not as popular, is abou the IRS: Knock Knock – IRS
Release Date: November 4, 2011
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Best wishes for your peaceful successful future,
Chief Editor at CrushTheStreet.com