Money Mondays

Historically, the stock market has led the economy by an average of six months at major turning points. Typically during recessions, the market will turn and rally and, six months later, the economy will shift from negative to positive Gross Domestic Product (GDP). I think the stock market is drifting these days because investors are not convinced the recession will turn anytime within the next six months. When investors believe the bottom and subsequent positive GDP is six months out, the market will rally.

****

As I have mentioned in the past, investors are acting based on their emotions. When you realize that you control the economy? Not your fears or what Congress and CEOs dictate the margin to be. Part of the investor skepticism centers around the Economic Stimulus Package and the surrounding debate over whether it will jump start the economy.

****

I am positive each of us have been affected by the decisions of the Government and how the funds will be dictated. However, you can lead your household to believe that we will come together an prevail as society has done in the past.

****

I do not believe today's economic and financial problems are as dire as those in the 1930s. Nonetheless, I am optimistic the stock market will eventually respond favorably to government intervention today, just as it did under FDR's (Frederick D. Roosevelt) New Deal.

Be inspired,
Bahiyah Shabazz