Implications of a Government Shutdown

Posted in: Economics, General, Stock Market, Thought of the Week

The biggest news this week has been the government shutdown. As scary as the concept of our government shutting down may seem, it’s actually not as bad as it sounds. A government shutdown is the closure of non-essential offices of the government due to lack of budgetary approval for the upcoming fiscal year. As of today, Republicans and Democrats don’t see eye-to-eye on how to spend our tax dollars for the coming fiscal year.

Our Investment Committee will make no attempt to either time or predict government decisions because they are fundamental investors, and decisions made by our leaders rarely can be analyzed using fundamental analysis. Furthermore, our Investment Committee believes that anyone who attempts to predict and profit in the short-term on the outcome of a government decision is guessing, and there is no need to put money behind such predictions.

The government shutdown has caused short-term volatility. Markets don’t like uncertainty and any major decision coming from our government involves a level of uncertainty. Short-term traders are attempting to game the outcome and this has caused volatility in the short-term.  Additionally, we have seen the government shutdown before and in most cases it has been a non-event. The bottom line is that any short-term volatility caused by a government shutdown should be viewed as an opportunity to profit from the fear and panic of others. Our Investment Committee believes there will be little to no impact to the long-term investors.

Read this week’s Thought of the Week to learn more about the implications of the government shutdown.

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As an Investment Advisory Representative working in conjunction with Global Financial Private Capital (GFPC) we are provided weekly thoughts on what is happening in the economy and the market. Written by our investment committee at GFPC we find these thoughts to be informative and interesting.