Updated: Sep 25
I am so thankful I studied Economics in college. The study of Economics gives people a deeper perspective than how financial events look on the surface.
The current stock market dive over the last 30 days is causing people to begin panic-selling.
Did you know that panic-selling plays a huge role in stocks tumbling? People see their portfolio values dropping on a daily, weekly or monthly basis, so they sell their shares which cause the market to fall faster. But in reality, someone or some huge institutional investor had to start the selloff process. So, it does not matter who sold first.
What makes this selloff a little different than stock market drops in 2008 and 2001?
You guess it! Let's Go Brandon's economic policies along with interest rate increases are causing people to have less confidence in the markets.
Yes, it is true that interest rates would eventually rise since 2009. There was no way interest rates could remain at 13-year historically low rates.
However, Let's Go Brandon took some predictably, un-American actions such as halting oil drilling in ANWR (Arctic National Wildlife Refuge) on January 21, 2021, day one of his presidency. Under President Donald Trump, America was 100% independent of importing foreign oil. Under Brandon, gas prices have risen more than 100% (doubled) in all cities and has only dropped 15% from all-time highs.
Then, there is Russia controlling the flow of oil and natural gas to Europe. Both actions are causing American fuel and natural gas prices to remain at 40-year highs.
How should American investors look at current and possible further stock market drops?
Of course, each investor is responsible for making his or her decisions about their financial portfolios. Younger investors can wait for the market to correct itself more so than older investors in the final stage of accumulation before taking retirement distributions.
However, this current market volatility is different. For the most part, American politicians are partly responsible for downward markets. And, it's no secret that the American government is more socialist than in anytime in recent history.
For investors, if you believe the U.S. political situation is in socialist mode, I do not selling all your shares. Here's why. Socialists want people to work to collect taxes but do not want the common man and woman to achieve wealth like current multi-millionaires and billionaires.
The greatest fear rich socialists have is the common man and woman competing against wealthy socialist interests. The rich socialist wants to create the biggest wealth gap between the working stiff believing he or she can, one day, get rich from hard work or growing a business. Think Venezuela.
For investors, if you believe the U.S. political situation is more moving toward communism, I recommend selling all your shares. Cash out and invest in another sector like real estate. Here's why. Communists want to control all inputs to commerce: labor, natural resources and capital. Think Cuba, China or North Korea.
If investors believe in the government socialism agenda, and if you are young enough to benefit from dollar-cost averaging, I recommend not selling any shares. In my opinion, rich socialists want regular Americans to sell their shares so socialist billionaires can buy sold shares at 30-50 cents on a dollar. Take the growth ride up with socialist billionaires.
For older investors, I recommend looking for safe products to grow your portfolios using financial instruments with guaranteed rates and no loss of principal. Also consider that a tax hit today may cost less money today than a portfolio loss one year from now.
For people looking to further discuss this current economic and political environment, please contact me. Disclaimer: I work as a financial advisor and help Californians with fixed-rate insurance products.
Real People USA LLC