Date: Wednesday, July 10, 2013
Topic: How to Invest in an Economy Stuck in the Mud
Speaker: Donald Cassidy, President, Retirement Investing Institute
Investors need to adjust their outlook soberly, recognizing that the U.S. economy faces prolonged subpar growth. Deficit reduction and rising tax revenues clearly will pose notable drags on the economy, as we reverse decades of leverage and overspending. This implies a whole new thought process: not projecting past growth trends, and reducing holdings with high price-earnings ratios building in high expectations. Think in terms of three macro scenarios (positive, flat and difficult) and then analyze what industries/companies would be suitable in each. Portfolios ought to include some of each to hedge against guessing totally wrong on the major scenario. We need to reduce expected investment returns as well. Implementing such ideas requires that one not be a hold-and-hope investor!