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Four advisers on what to do in these highly volatile times

24.05.11

Six months to a year ago economic news was highlighting the inflation concern in China — an economy that serves as an indicator of global economic activity. China’s GDP was estimated to grow 9 percent in 2011, their central bank ordered banks to cut back on lending for the sixth time in 2010 and China’s money supply was soaring sprouting concerns that inflation would be difficult to tame.

Our stock market was continuing its rise from the July 2010 low; it dropped 16 percent from the highest point since the 2008 crash hit in April 2010. These developments were illuminating the beginning of a global economic recovery.  The mindset of investors six months to a year ago focused on their imagined concern that the dollar is losing purchasing power and the Fed’s money printing will cause an upward trajectory of debt that will collapse our economy. This couldn’t be further from the truth.

Five years ago, the maxim was “Leverage your way to wealth!” It almost seemed un-American not to be encumbered with at least two mortgages on your home. In 2006 housing prices hit their peak while banks were throwing money at homeowners. Real estate seemed like the only asset class that would not decrease in value, at least not decrease by much and if so, not for long.

Source: North Bay Business Journal