One of the biggest challenges for the mass investor is that they form an opinion about the markets, then search for analysis that supports their opinion, and reject any analysis that challenges their opinion... they are not prepared to be wrong. We saw this in the credit crisis crash in 2008, where most investors simply hung on to their stocks, all the way down to the bottom.
The key to being successful today is to understand the global flow of capital, and how this capital moves around the globe, seeking the best, and perceived safest economies, and sectors to invest in. Historically, it has only been the big money... institutional, and the very rich who were able to understand, and take advantage of these capital flows. That is no longer the case today, as with the ease and power of on-line trading, the mass investors are now able to easily participate in the global investment markets.
Before they can profit from this global flow of capital, the mass investors need to understand that the global flow of capital is a major factor in the development of bull, and bear markets. So the only thing holding the mass investor back from profiting from this flow of capital, is their lack of understanding of how all these markets are interconnected.
Investors need to stop thinking only about their domestic markets, and understand how their local market is affected by international events. The average investor has no idea why the US equity markets have been rising. They watch the mass media, and when the bobble heads on CNN tell them that since the markets are rising, the economy must be improving. Unfortunately, those who rely on the mass media for accurate market analysis, will end up losing their shirt.
Those who believe that the US has turned the corner, and all is well, are in for a rude and costly awakening. The reality is that the only reason that the US is not in the spotlight for its massive debt and financial problems, is that there are so many other regions that are in worse shape today. Simply put, the US is currently the least ugly economy right now, but that will change.
The spotlight will shine on the US massive debt, and financial problems, but not until we have dealt with the huge problems in Europe and Japan first. Both of these regions are bugs in search of a windshield, and very soon their fate will be decided.
What investors need to grasp is that as each of these regions grapples with their many financial issues, first the big institutional money, then the smart wealthy money, and finally the mass investors in these troubled regions will seek out other, safer environments to put their hard earned money.
Most North American are unaware that many of the emerging markets have seen huge currency devaluations recently, as their economies have been hit due to the Federal Reserve in the US planning to taper their bond buying stimulus program. Those economies had benefited from this program, and with it ending, investors pulled out of those emerging markets, causing their domestic currency to decline sharply.
Where did those investors move their capital to... to the US equity markets? They don't want to move it to the US bond market because they get no return due to the historically low yields today. These are the things that investors need to understand... global capital will flow to the perceived best and safest environment to park their money.
The reasons that the US stock market has been rising, and will really start to rise higher in the next few years, are as follows:
1. Although the US has a horrific debt problem, currently with the US dollar being the world reserve currency, it is perceived to be the safest place to park capital today.
2. While the US has very serious debt issues, the problems in Europe, Japan and many of the Emerging Market countries are more immediate and more severe today. In Europe for example, the unemployment rate for the region is 12%, but in Greece it is 28%, and 26% in Spain. For the youth, the problems are much worse, with 63% of those under 25 in Greece, and 53% in Spain, unable to find a job.
3. We are seeing violence in Spain, Portugal, Greece, Turkey, Bosnia, Venezuela, Brazil, Bahrain, Egypt, Tunisia, Syria, Sudan, Malaysia, Thailand, Romania, and of course Ukraine. The youth are hungry, homeless, and jobless. They are fed up with he corruption, and the theft by their greedy politicians. They are desperate, and they are demanding change. When these people see what happened in Ukraine, they will be inspired.
The mass investor in North America will say... "sure but that is over there, it doesn't affect me." It is those who fail to connect the dots, to see that this is a global economy, and understand that it is all inter-connected, who will fail in their investments over the next decade.
While many in North America say the dollar is doomed, they are too premature. The real problems today are in Europe, Japan, and the Emerging Markets. Once Europe and Japan face the music, and get their economies in order, then the spotlight will fall on the US economic problems, but not until Europe and Japan have gone through a major financial restructuring.
And when the spotlight does hit the US, it will not be pretty. The economic situation there is very serious, have a look:
A. The official national debt is $17.4 trillion, which equals $151,000 per taxpayer.
B. Total unfunded liability (Social Security, Prescription Drug, Medicare, etc) is $128 trillion, which equals $1.1 million per taxpayer.
C. Student loan debt totals $1.12 trillion
D. Number of Americans receiving food stamps is 46 million
E. Official number of people unemployed (does not include those who can only find part time work, or those who quit looking) is 10.4 million. Including those who can only find part time, and those who have given up trying, the total jumps to 19.5 million.
These are just a few of the very disturbing numbers for the US economic picture. In addition, we are seeing many US cities going bankrupt, with Detroit being the largest city so far, but there will be many more. Most US states are also in very serious financial trouble, and those problems will be hitting the headlines over the next couple of years.
We have been warning about these massive debt problems ever since we started publishing in 2002. The good news is that these problems have finally started to get the exposure they need, and the politicians who ignored them for decades, are now going to have to face the music. Make no mistake; digging all of these countries out from their respective financial holes will not be pretty... very tough decisions will need to be made.
Unfortunately, we expect that there will be much violence, not just with the many protests and riots that will continue to occur, but typically when leaders become unpopular, they look for diversions, and war is one of their favored diversions. Wars create a common bond, and can deflect and postpone the anger facing the government, as the citizens rally in a common cause against a foreign foe.
What can investors do?
Successful investors will be those who understand how these things are all connected, and they will be able to follow that global flow of capital, away from unstable and risky economies, and into safer environments.
These savvy investors will also understand that as each of these countries come under the spotlight, the faith in the government if each country will be severely challenged. As investors lose faith in their government, they will move their capital out of public investments (government bonds), and into private investments (stocks, commodities, art, diamonds, gold etc). We are already seeing this trend begin, but it will not truly pick up steam until later this year, and over the next three to five years.
It's your money - take control. Do not be one of the masses who watches CNN, and assumes everything will magically turn out fine. Most investors, the same ones that never sold in the financial crash in 2008, will also get burned here, if they do not understand how capital is starting to flow, first to North America, and then out of North America.
It is all connected, and each phase has its time, and place.
The investment future is a constantly moving target... what we do is help you improve your aim, and give you a steady hand. http://www.thetrendletter.com
Article Source: http://EzineArticles.com/?expert=Martin_Straith
Article Source: http://EzineArticles.com/8373186
The key to being successful today is to understand the global flow of capital, and how this capital moves around the globe, seeking the best, and perceived safest economies, and sectors to invest in. Historically, it has only been the big money... institutional, and the very rich who were able to understand, and take advantage of these capital flows. That is no longer the case today, as with the ease and power of on-line trading, the mass investors are now able to easily participate in the global investment markets.
Before they can profit from this global flow of capital, the mass investors need to understand that the global flow of capital is a major factor in the development of bull, and bear markets. So the only thing holding the mass investor back from profiting from this flow of capital, is their lack of understanding of how all these markets are interconnected.
Investors need to stop thinking only about their domestic markets, and understand how their local market is affected by international events. The average investor has no idea why the US equity markets have been rising. They watch the mass media, and when the bobble heads on CNN tell them that since the markets are rising, the economy must be improving. Unfortunately, those who rely on the mass media for accurate market analysis, will end up losing their shirt.
Those who believe that the US has turned the corner, and all is well, are in for a rude and costly awakening. The reality is that the only reason that the US is not in the spotlight for its massive debt and financial problems, is that there are so many other regions that are in worse shape today. Simply put, the US is currently the least ugly economy right now, but that will change.
The spotlight will shine on the US massive debt, and financial problems, but not until we have dealt with the huge problems in Europe and Japan first. Both of these regions are bugs in search of a windshield, and very soon their fate will be decided.
What investors need to grasp is that as each of these regions grapples with their many financial issues, first the big institutional money, then the smart wealthy money, and finally the mass investors in these troubled regions will seek out other, safer environments to put their hard earned money.
Most North American are unaware that many of the emerging markets have seen huge currency devaluations recently, as their economies have been hit due to the Federal Reserve in the US planning to taper their bond buying stimulus program. Those economies had benefited from this program, and with it ending, investors pulled out of those emerging markets, causing their domestic currency to decline sharply.
Where did those investors move their capital to... to the US equity markets? They don't want to move it to the US bond market because they get no return due to the historically low yields today. These are the things that investors need to understand... global capital will flow to the perceived best and safest environment to park their money.
The reasons that the US stock market has been rising, and will really start to rise higher in the next few years, are as follows:
1. Although the US has a horrific debt problem, currently with the US dollar being the world reserve currency, it is perceived to be the safest place to park capital today.
2. While the US has very serious debt issues, the problems in Europe, Japan and many of the Emerging Market countries are more immediate and more severe today. In Europe for example, the unemployment rate for the region is 12%, but in Greece it is 28%, and 26% in Spain. For the youth, the problems are much worse, with 63% of those under 25 in Greece, and 53% in Spain, unable to find a job.
3. We are seeing violence in Spain, Portugal, Greece, Turkey, Bosnia, Venezuela, Brazil, Bahrain, Egypt, Tunisia, Syria, Sudan, Malaysia, Thailand, Romania, and of course Ukraine. The youth are hungry, homeless, and jobless. They are fed up with he corruption, and the theft by their greedy politicians. They are desperate, and they are demanding change. When these people see what happened in Ukraine, they will be inspired.
The mass investor in North America will say... "sure but that is over there, it doesn't affect me." It is those who fail to connect the dots, to see that this is a global economy, and understand that it is all inter-connected, who will fail in their investments over the next decade.
While many in North America say the dollar is doomed, they are too premature. The real problems today are in Europe, Japan, and the Emerging Markets. Once Europe and Japan face the music, and get their economies in order, then the spotlight will fall on the US economic problems, but not until Europe and Japan have gone through a major financial restructuring.
And when the spotlight does hit the US, it will not be pretty. The economic situation there is very serious, have a look:
A. The official national debt is $17.4 trillion, which equals $151,000 per taxpayer.
B. Total unfunded liability (Social Security, Prescription Drug, Medicare, etc) is $128 trillion, which equals $1.1 million per taxpayer.
C. Student loan debt totals $1.12 trillion
D. Number of Americans receiving food stamps is 46 million
E. Official number of people unemployed (does not include those who can only find part time work, or those who quit looking) is 10.4 million. Including those who can only find part time, and those who have given up trying, the total jumps to 19.5 million.
These are just a few of the very disturbing numbers for the US economic picture. In addition, we are seeing many US cities going bankrupt, with Detroit being the largest city so far, but there will be many more. Most US states are also in very serious financial trouble, and those problems will be hitting the headlines over the next couple of years.
We have been warning about these massive debt problems ever since we started publishing in 2002. The good news is that these problems have finally started to get the exposure they need, and the politicians who ignored them for decades, are now going to have to face the music. Make no mistake; digging all of these countries out from their respective financial holes will not be pretty... very tough decisions will need to be made.
Unfortunately, we expect that there will be much violence, not just with the many protests and riots that will continue to occur, but typically when leaders become unpopular, they look for diversions, and war is one of their favored diversions. Wars create a common bond, and can deflect and postpone the anger facing the government, as the citizens rally in a common cause against a foreign foe.
What can investors do?
Successful investors will be those who understand how these things are all connected, and they will be able to follow that global flow of capital, away from unstable and risky economies, and into safer environments.
These savvy investors will also understand that as each of these countries come under the spotlight, the faith in the government if each country will be severely challenged. As investors lose faith in their government, they will move their capital out of public investments (government bonds), and into private investments (stocks, commodities, art, diamonds, gold etc). We are already seeing this trend begin, but it will not truly pick up steam until later this year, and over the next three to five years.
It's your money - take control. Do not be one of the masses who watches CNN, and assumes everything will magically turn out fine. Most investors, the same ones that never sold in the financial crash in 2008, will also get burned here, if they do not understand how capital is starting to flow, first to North America, and then out of North America.
It is all connected, and each phase has its time, and place.
The investment future is a constantly moving target... what we do is help you improve your aim, and give you a steady hand. http://www.thetrendletter.com
Article Source: http://EzineArticles.com/?expert=Martin_Straith
Article Source: http://EzineArticles.com/8373186
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