When it comes to investing, nothing kills good returns more than nationalism. And nationalism rules at large investment firms. As of March, 2007, the major U. stock market index, the S&P 500 stands, at a notch above 12,000 stands below the 1,250 level it stood at seven and a half years ago. So over seven and a half years if your portfolio has tracked the S&P 500’s index as most U.
professional money managers aim to do, you have slightly less money, in absolute terms than you had seven and a half years ago. In terms of purchasing power, with the rapid deflation of the dollar, your same amount of dollars buys much less today. That’s a whole lot of waiting for a whole lot of nothing. And that’s the good news.
The bad news is, as of 2007, the performance of the U. stock market is likely to become even worse for the rest of this decade. Why? For starters, check out the poor credit quality of thousands of American companies, many of which like the American consumer, seem to be overleveraged in debt. Standard & Poors, a highly respected financial services firm that ranks the credit ratings of corporations all over the world, released a report on May 24, 2006 that declared a “Downgrade Potential Across Credit Grades and Sectors.” Standard and Poors covers corporations based in Asia/Pacific, Canada, Europe, the Middle East, Africa, Latin America, and the U. This report stated that 85% of the corporations at risk for a potential downgrade in their credit rating (a rating that judges the corporation’s ongoing financial viability) were based in the U. or Europe, with the majority (61%) based in the U.
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