Controlling the No Control Frustration
If you feel frustrated, perplexed and downright pissed off about the shenanigans going on in Washington, D.C., right now, then you’re not alone. The partial government shutdown, the potential fiscal damage it could have and the even more fiscally dangerous issue of the debt-ceiling are circumstances that are tough to deal with from where we sit.
During times like these, one thing to keep firmly ensconced in the forefront of your mind is that there are things you can control in your financial life — and things you can’t.
Market volatility, price trends and political winds all fall into the camp of the things you can’t control. Acrimony between political factions in Washington is likely going to continue, and even get much worse, in the years to come. That situation is likely to continue creating short-term disruptions in financial markets akin to what we’ve seen of late.
For example, the recent politically motivated sell-off has caused the Dow to come very close to falling below its 200-day moving average for the first time this year. The Dow and other major market indices already have fallen well below their short-term, 50-day moving averages, as can be seen by the chart below.
As for the things that are within your control, it is here that we can take positive and decisive action to defend and grow our money.
Given the current political climate, and considering that third-quarter earnings are about to flood in during the next several weeks, now is the time to take an inventory of all of your invested positions. How is your money performing? Do you have too much exposure to bonds? What about stocks? Are you allocated to mutual funds that are underperforming their benchmark? Are you paying high fees for the privilege of that underperformance?
These are all questions you need to ask and answer, and that is 100% in your control.
I know it can be frustrating watching and reacting to the seemingly endless noise in the 24-hour news cycle. But if you stay focused on what you’re doing with your money, you always will keep your head above the fray.
Finally, I must make one quick comment here about one news item out today, and that is the nomination of Janet Yellen to be the next head of the Federal Reserve. Yellen is Wall Street’s preferred choice, and her ascension to the top slot at the Fed from her current vice chairmanship is expected to be a continuation of the Ben Bernanke easy-money policies of the past several years.
If you’re a big banker wanting to make sure you get your easy-money sugar fix from the Fed, then the announcement of Yellen as the new Fed chairman probably has you smiling. For everyone else, well, let’s just focus on what we can control.
Stockman Speaks the Truth
“We now have the spectacle of the state’s central banking branch blindly adhering to a policy that has but one principal effect: namely, the massive and continuous transfer of income and wealth from the middle and lower ranks of American society to the 1 percent.”
David Stockman is a former politician and businessman, having served as a Republican Congressman from Michigan. He’s perhaps best known as the Director of the Office of Management and Budget under President Reagan. Recently, Stockman has been one of the strongest, smartest and most vocal critics of the policies of the Federal Reserve and the growth of the leviathan state. In his book The Great Deformation, Stockman tells us why the current policies in Washington must be changed if we are to right our hobbled economic ship. I highly recommend this book, if you want to understand how things in Washington got to be the mess that they are right now.
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