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Fears Over The Economy Hit Wall Street

Fears Over The Economy Hit Wall Street

I’ve been saying for some time that the strength on Wall Street is only temporary. With the political game that Washington has been playing, our economy has not yet started to recover or in some cases, hold on to their current levels. The debt ceiling has been an issue for months and in the eleventh hour Congress finally gets their act together to pass an extension. What’s good about an extension for the long term? Nothing.

Standard & Poors along with Fitch and Moody’s are concerned about the true condition of America’s deficit and the ability to function within a budget. It’s been over 800 days since Congress has passed a budget and that’s because they’ve been spending money and if they had a budget in place, they wouldn’t be able to do as they’re doing for the last few years.

As you can see on Wall Street, investors are moving their money out of equities and moving them to saver havens like bonds, precious metals and in some cases, overseas. The DOW lost 266 points earlier this week and claimed back only 30 point the next day. As of this morning at 10:45am, the DOW is down another 208 points and who knows where it’s going to close at the bell. Since Monday morning the DOW has lost nearly 5%.

As for the NASDAQ, it too has taken a hit during this week thanks to the uncertainty of the actions going on in the Beltway. NASDAQ is down (so far) this week over 5% along with the S&P 500 dropping 6% during the same period. A sign of things to come in the near (and possibly long term) future.

Do what they smart money has been doing for quite some time and that is buying gold, silver and other precious metals. Gold has gained 10% since June and 4% in just the last few days. How can you sit by and watch as others, who have a better idea of the markets, as they move assets to other sectors to hedge against the inevitable pullback on Wall Street? I suggest you really look at your portfolio to see how diversified you are and make the appropriate moves to balance it. Remember to not put more than 20% into any one sector or individual stock. Doing so may cause you to lose more than you would have if you diversified.

As for me, I’ve moved out of most of my positions in equities. I’ve been building up positions in the commodity sector, mainly gold and silver, to get ahead of the currency issue plaguing our country as well as the world. You might want to do the same.

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