The US economy is going to need more stimulus money to recover and that will drive the dollar down. How about a weaker dollar and your investments? A weaker dollar is often good news for US exports but how does that work out in a world where every economy is weak and nobody has the money to buy anything? Let’s look at how a weaker dollar might affect the various sectors of the stock market.
The investor community is fretting over interest rates. Inflation is creeping up and the US Federal Reserve is likely to keep raising rates. When rates creep up, the stock market heads down. And if you hold long term bonds they will continue to pay the current low rate even as new bonds pay more. That means you will either sell them at a loss or hold them with their low yield until maturity. Depending on the positioning of your investment portfolio, will you lose money when interest rates to up?
Short versus Long Term Bonds
We recently wrote about tax free municipal […]
It was Illinois Senator Everett Dirksen who in the 1960’s said in regard to the federal budget, “A billion here, a billion there and pretty soon you are talking real money.” It would seem that the saying is still true, but only if you substitute “trillion” for “billion”. Another prophetic Dirksen quote is, “I have […]
The United States government will need to borrow around $2.5 Trillion in 2009. A valid concern has been whether anyone would want to buy US treasury notes. The recent auction of $32 Billion in three year notes implies that investors are planning on keeping their money in short term cash instruments. Are these folks anticipating […]