As 2013 comes to a close we see the market continuing its upward trend. Corporate profits are good. The Fed is continuing is expansionary monetary policy. And Congress has reached a new budget deal before any government shutdown. Life is good. Meanwhile, the average American has no idea why it seems they are working harder than their parents to make ends meet. Many have to borrow from their credit cards just to pay regular monthly bills.
The Pivot network recently aired a documentary entitled: "End of the Road: How Money Became Worthless." This program describes how the Fed's forty-year experiment in "fiat" currency has led us to the present economic state of affairs. This began in 1971 when President Nixon decoupled the US dollar from the gold standard. Since then the Federal Reserve has worked hand-in-hand with the Treasury Department to print and borrow excessive amounts of money to keep our economy afloat. This ongoing cycle demands that the Fed borrow increasing amounts of currency to pay back amounts previously borrowed plus interest. The cycle MUST continue or else everything collapses. This process will someday be revealed as the biggest Ponzi Scheme in the Financial World. It further describes how the price of gold is being held artificially low as Central Banks lend out their gold stock multiple times over. Time will tell how long this process will be able to sustain itself.
This market continues to offer opportunities for investing, regardless of its direction, up or down. A well diversified portfolio has been shown to outperform over time. Right now many of the Dow stocks are paying at least a 2% divided. And companies paying this dividend are more stable than most banks.
The above information is for educational purposes only. Any decision to buy, sell, or hold a specific investment for your portfolio should be reviewed by your investment adviser.
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