Should Investors Be Concerned About The Economy?

| April 16, 2012 | 0 Comments

The last week or so has been a bit disappointing in terms of economic news.  Lately, we’ve gotten used to pretty steady positive news on the economy – especially in regard to the job market.  So, the recent negative news seems to have spooked investors a little.

The question is, should investors be concerned about the economy? 

Really, there are two parts to the question.  First, we need to understand how the economy is really doing.  Then, as investors, we need to decide if we should be concerned.

Unfortunately, part one isn’t obvious.  On one hand, the job market appeared to be showing solid improvement this year.  But, then the March jobs report came out well under expectations.

On the other hand, retail sales have improved substantially for two months.  And, that’s a great sign consumers are spending money again.

Here’s the thing…

Even the Fed doesn’t have the answer.  In fact, Fed officials have differing opinions on several key policy decisions.

Should the Fed keep rates low until 2014?  Is more quantitative easing needed?  Is inflation a concern?  These are the questions the Fed is debating heartily at their meetings.

The lack of anything resembling a consensus means the Fed isn’t sure just how much the economy is improving.  And, if they don’t agree, how can we know for sure?

The answer is – we can’t know… which leads us to the second question.

Should we be concerned?

Look, there are still a lot of issues in play.  It’s not just the US economy.  These days, the market is impacted by the global economy.

Europe’s debt crisis is a factor.  Oil prices are a catalyst.  And, don’t forget earnings.  We’re just starting week number two of earnings season.

Clearly, there’s a lot to keep track of as an investor.

Here’s the bottom line…

With all the potential catalysts, we may see some short-term volatility in the market.  However, I think the economy (and the stock market) is in good shape for a strong 2012.

I’ll stick to what I’ve been saying for the last several weeks.  Either the economy is going to continue steadily improving.  Or, if the economy falters, the Fed is going to step in with another round of QE.

No matter which scenario occurs, it’s bullish for stocks.  To put it plainly, we may see some bumps along the way, but staying invested will keep you on the path to profits.

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Category: Breaking News, Investing in Penny Stocks

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