2007 and 2008 have been eventful years, full of investment related news. These years are marked with mergers and acquisitions, US housing market challenges, record oil prices, sharp decline in US dollar, rising US deficit, galloping energy prices, too much attention to global warming etc. There was a lot of news for investors to think and discuss about.
The period starting from second half of 2007 has been particularly marked for wide fluctuations in stock and money markets. We saw lows and highs starting from October 2007. This sent panic waves across the investing community and across the globe.
2008 And US Economic Dose
Start of 2008 was equally dismal. Amidst huge fluctuations, the US Government was forced to take immediate emergency measures which lifted the market a good deal in US and elsewhere. Even then the future looks murkier.
With US having taken record breaking measures, this can be both a good and bad news for the market. While it is good for providing an immediate stimulus to the market for preventing recession to occur, this can also provide a bad impression that something major is wrong with the economy and these could be understood as desperate measures. This may further unnerve investors.
Gyrating capital markets created an uncertain position, making it very hard for investors to take investment decisions.
Stick to Long Term Goals
One thing that is clear about this mess is that one should stick to long term goals. It should be recognized that investment related objectives are achieved only over a longer period of time. It should also be understood that markets can do anything in the short run. It is the long run that matters and true success of an investment strategy can be measured only over a period of time.
In these conditions, it becomes imperative that one takes a hard look on one's portfolio. Investors should constantly review profit and loss statements.
Avoid Frequent Shifts
Moving in and out of markets frequently can be an extremely risky strategy as many investors have found out recently. If markets fall dramatically, many investors are likely to end up selling their holdings in panic which may not be good. Even professionals cannot time the market correctly. Timing the market will at best be a futility.
It is difficult to predict the movement of markets. In view of this, investors are better advised to follow a discipline, formulate a plan and to stick with the same.
Outlook For Future
Investors are worried for the future. There are many questions which need answers. Will the fears of Americans come true? Will housing meltdown continue? Will credit crisis spread to other sectors of the economy? How are energy prices going to behave? And finally will US economic package be able to prevent economic slowdown?
Nobody can predict the outcome. However, it appears that energy prices will continue to remain high. If there are no further credit problems, it is possible that further deepening of the economic mess gets stopped.
With elections in the US, there will be too much economic debate and new economic initiatives. Taking the overall conditions in view, it seems that economic malaise may not turn out to be as bad as it is thought. There will be threats and opportunities for investors. They need to guard themselves well and not to be afraid of benefiting from new economic trends.
The author has background in business, economics and finance. He is presently researching in finding ways to make money and working on the following website and blogs: