In brief, yesterday, on the way into Boston, one look at market news found gold slumping and China a concern among investors as there was a slump in the nation’s growth. The Chinese GDP fell slightly, down 7.7 in the first quarter, from 7.9 in the previous (See Graph from The Australian below.) China is Australia’s largest trading partner, as noted in the Australian. “US retail sales and consumer confidence data disappointed late last week, while gold led a commodity sell-off to below $US1500 an ounce -- its lowest price since 2011 -- on concerns about the sale of bullion by central banks, driving down shares in gold producer Newcrest Mining by 8.2 per cent.”
The above graph from Bloomberg,via the Australian
There have been, of late, more than a few “doomsayers” speculating on what can be termed as a “financial apocalypse”, however, looking at the global nature of finance as it stands today, and the way all markets are interconnected and who the fall or rise of stocks in the U.S. affects, one should be more vested in the news of finances for one very good reason – those with modest investments, such as 401K’s, which are self-directed, could stand to lose, gain or hold onto their earnings. It is not that this blogger has any background in finances, except for losses in a 401K when the markets fell in 2008 – prompting a look at what was happening with high risk options, as well as safe options, in an effort to make gains on modest earnings, while holding onto the initial investment,
The U.S. Debt, for one is of concern, given the fact that the the Chinese own a huge percentage, along with Japan, the amount of the national debt owned by these two nations is at 42%(Desert News.). Paying down the national debt, attracting more businesses through tax incentives (cuts), and making cuts to unnecessary programs, would go a long way towards paying this debt down. It is the fact that, although a stable government, with an eye towards growth, one can anticipate China will have its ups and downs, along with all of its trading partners – one only needs to look Cyprus to see that global economics affect all nations to some extent.
Gold fell on the move by Cyprus to sell it’s gold to settle the national debt, this caused a 30 year low as investors panicked. The US stock market fell based on both the drop in Gold, and the reports on slow growth in Gina (Fox Business).
Expect the U.S. to rebound, as it is won’t to do- but keep an eye on the global markets, and rebalance your 401K accordingly – as most accounts offer features of safe, moderate, and aggressive options, one might want to move rebalance towards safe or moderate, leaving a smaller percentage in aggressive options – as a buffer over the next few months.
If one wants to know who invests in the stock market, those who hold 401K’s, pension funds by city, and state governments, private company pensions, and those whose earnings are not considered to be anywhere near the 1%.