The answer is to examine the basics. What are the key elements that make up the investing environment?
What should an investor be doing right now?
Firstly, this is not a free market situation anymore. We are operating in a rigged market. That sounds bad, but it’s not as bad as you think. The market is being pushed around by a kind of pressure that verges on it being rigged, because the folks driving markets for better or worse are politicians.
If free markets had operated since 2008, we would be in a very different place then we are right now, again for better or worse. Likewise the Euro crisis which is shaking the global economy is purely a political dynamic as so will be its resolution, for good or ill.
The markets aren’t setting prices unfettered; the market is being twisted and warped by the application of untold billions of dollars and Euros of state created funds.
Governments are trying to beat the market by smoothing it out with oceans of cash, hoping for a recovery – if you tried to do that as an individual you’d be arrested.
Before the implosion of the credit crunch, the markets were driven by economics but now they are driven by politics.
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