Every four years, money and power will have a showdown. October will be a nerve-wrecking month for Americans as the Presidential Election enters into the final leg. There are a lot of uncertainties as to who will be the most powerful person on earth. But regardless the outcome, investors dislike uncertainties. In view of this, should stock investors sell everything and run for their lives?
The US Presidential Election aside, there were already many warning signs of cracks forming in the stock market. In early January 2016, China stock market had two massive melt-downs, leading to forced trading halts by the regulators. Then entered Brexit. Pound experienced free-fall in value and dropped to decades low.
Next on the list may be Deutsche Bank, which has being ordered by US Department of Justice to pay $14 billion for its past practice in mortgage-backed securities that led to the Great Financial Crisis. Many analysts expressed concerns that Deutsche Bank episode could ignite another round of financial crisis but in my opinion, this is unlikely. This is because the German bank is too big to fail and very likely, the EU will bail out the banking giant.
As a wealth builder, it is unproductive to predict when the next economic crisis will arrive because the matter of fact is that no one can predict the future. But we can certainly take concrete actions to future-proof our wealth by diversifying our assets.
In December 2015, the US Fed had announced the first interest rate hikes for many years. Many experts had predicted that there would be at least two more rate hikes this year. In my view, a December rate hike is very likely, given the encouraging employment trend in US for the past year. Many thought that interest rate hikes would cause gold …