Dian's Column
Dian's Archive


Thank the Fed chairman for cluing us in to the future--now we can invest confidently

By Dian Vujovich

Well, thanks to Federal Reserve Chairman Bernanke’s report Wednesday, we can breath a shy of relief and put all the crisis of confidence concerns everybody has been bellyaching about to bed. Saying pretty much that the future looks like crap economically, let’s move on. And do so with a sense of confidence.

In case you’ve forgotten, confidence is all about being certain about something. It’s like a sense of knowing whether we want to admit that knowing or not. In this case, Bernanke told us what most already knew: America is in a tough bind, the stock and bond markets reflect that and it’s going to take years—maybe even decades— to get us out of the mess created. Developed nations around the globe are a part of that mess too.

Look back at history and you’ll see that it took over two decades for stocks to get back to their pre-market levels prior to the Great Depression. One of the things that made that recovery possible was World War II.

Since we’re already involved in a couple of wars that have racked up huge financial costs, to say nothing about the cost of the loss of human lives, so much for a war bringing our economy back from the brink.

Unless you’ve been living under a rock you know how difficult making a living has been for millions in America these days. It has been a tough go for them for years and that tough go is going to keep on going. There’s nothing pretty about that fact but clawing our way out of the financial mess in our country is going to take a fresh co-operative approach.

Until that co-operative approach comes into play, believe it or not we’ll survive, adjust, make some money and even save some along the way.

So whether you happen to be one of the many super-rich in this grand land of ours, a frugalite who throughout their life has saved like a squirrel that only knows winter, or even better— someone who lives below their means— confidently know that making money in today’s environment takes the same skills as it does during bull market times.

To can that crisis of confidence mentality, consider this: The current market is considered by some to be a value-buyer’s dream. Yes, stock prices can or even may continue to fall but that risk is —and always has been— an inherent one when it comes to investing. And every investor knows that. Buy value for the long-term.

As for yields on fixed-income investments, they almost couldn’t get any lower. No bargain there for many long-term fixed income investors. But if you happen to have the money to purchase say a home, a new or used car or to refinance, not taking advantage of these low rates is like kicking a gift-horse in the mouth.

Back to equities, dividend yields on many stocks couldn’t be sweeter. Nothing wrong with looking at them as a source of income and one that comes with upward growth potential. Research companies with little to no debt and a long history of paying dividends then choose from the many that fall under those parameters.

In the final analysis, confidence is what makes us strong as individuals and as a nation. It makes us great. And gives us the strength to forge ahead no matter what the prevailing circumstances are.

Go in confidence.

To read more articles, please visit the column archive.

[ top ]