Uncertainty over a Slowing United States Economy

Uncertainty over a slowing United States economy is driving stock prices lower and raising the VIX. Investors worry about the debt crisis in Europe, slowing of exports out of China, and whether or not the United States Federal Reserve will resume stimulus measures if the economy lags too much. On the other hand United States manufacturing is coming along well. The Institute for Supply Management national manufacturing index is the highest in a year while production, hiring, and orders are all up. As uncertainty over a slowing United States economy worries the stock market, United States corporations are making money. To a great degree uncertainty over a slowing United States economy has to do with events overseas and not facts at home. At the current time an investor in the USA can invest in Apple for the dividend as well as growth. Investment in sustainable fracking technology has served to make the USA less dependent on imports of foreign oil. And, US multinationals are investing in the Western Hemisphere but bringing profits home such as when Marriott invests in Latin America.

Where Will Uncertainty over a Slowing United States Economy Take the Stock Market?

The stock market tries to predict the future. After all that is where, hopefully, the profits are. Fundamental analysis of past and current data is used to predict future growth and profits. Technical analysis helps investors track market sentiment. Whether one is picking penny stocks with an eye on growth or dividend stocks with steady income in mind, uncertainty over a slowing economy makes the job tougher. Long term value investors commonly say that they do not invest in a given stock until they have a clear idea about just the company does to make money. Rather than agonizing over labor reports and the latest about the European debt melodrama many successful investors are looking to invest in US stocks, individual stocks that are turning profits quarter by quarter, expanding their markets, and, in fact, bringing jobs back to the USA. What does the company sell? Who are its competitors? What is their long term game plan? A biotech company with a newly released medical product may have no competitors for several years during which it essentially have a license to print money. Many companies in high cost of entry businesses may not be growing at rapid rates but are stable sources of dividends and steady growth.

Profiting from Volatility

Uncertainty over a slowing United States economy may be driving up stock price volatility. If you, the long term investor, have a clear idea about why your choice of companies will be successful you can profit from the volatility and the fears of others. Right now one of best places on earth to invest just might be the USA. Call options are a time tested means of profiting from market volatility. If you believe that your stock will not rise in price you can sell call options and profit every quarter. If your research leads you to believe that a given stock is due to rise in price you can purchase call options on it. If the price rises you can still buy the stock at the lower, contract price. Your risk is limited to the price of the contract. As always we are not suggesting that one purchase the stocks listed above or ignore them. Consider this discourse an example of thinking through stock purchases and sales.

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