Works at Champion Wealth Strategies
Attended Louisiana State University
Lives in Gonzales
86 followers|274,378 views
When investing, all types of risk are present. One of those risks is political risk. What we are seeing now with the recent pullback in stocks is representative of that risk. It doesn’t matter who you personally blame with regard to the shutdown or the impending debt ceiling increase. The bottom line is that the inability to reach a deal is weighing on the markets. Who is responsible is better suited for those discussions related to politics only. There is a fear gauge for the market and it is called the VIX or volatility index. That has been spiking recently, indicating a relatively high level of fear in the near term. Traders are also allowed to purchase futures contracts of the VIX, or plainly stated they are allowed to place bets (essentially) on what level of fear there will be in the future. That is relatively low; therefore, the markets are showing us that it is more likely than not that this will be a short term down trend followed by a longer term up trend. What does this mean? It means I’m not panicking and neither should you. What is currently losing the most value right now are speculative stocks, technology stocks, and biotechnology stocks. Those have been the leaders over the past 3 or so months, and it seems that many people are just taking short term money off the table. The government shutdown is having little effect on the US and more importantly the global economy. The longer it lasts, the worse it will be. The debt ceiling problem is the real concern. It is virtually impossible for the US to default on its debt unless it is done on purpose. The US government takes in 10 times the tax revenue than is needed to pay interest on government bonds issued. Bond rates have FALLEN in recent weeks. What does that mean? It means there is more demand for US bonds. Why would people rush to lend money to a government that is about to default? Well, frankly, because we aren’t about to default. This appears to be a buying opportunity for stocks in my opinion, especially those related to technology. It may get a little worse before it gets better. The economy in the US is improving. The global economy is improving. Don’t let the headlines or the posturing scare you. Save that for the little goblins on Halloween!
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- Champion Wealth StrategiesFinancial Advisor, present
Baton Rouge - Houston - Sugar Land
Have 3 children. Haden, Christian, and Kendall
- Louisiana State UniversityBachelor of Arts, 1994 - 1998
- Louisiana State UniversityMaster of Business Administration, 2002 - 2004