Kicking the Can Down the Road


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

The concern surrounding the government shutdown appears to be over.  Our government has “kicked the can down the road” until February.  In other words, our operations will be funded through February. Crossing the debt ceiling has been averted, and the government shutdown is over… For now.

There are two takeaways we can expect from the resolution this week and the actions from Congress. First, the economy will feel little impact. We will not know the true impact of the government shutdown until fourth quarter GDP numbers arrive in March 2014. However, History has taught us that shutdowns impact the economy very little. Second, the media will shift to tapering again. We expect the media’s desires to keep short-term drama front and center will move their focus back to the potential for tapering of Quantitative Easing (QE) in December.  To keep it simple, our Investment Committee expects more short-term disruptions in the market by year-end.

Our leaders have done nothing more than “kick the can down the road”, and we will be back in the same place come late January. Investors should use these disruptions as buying opportunities. When there are short-term disruptions that are not fundamentally sound, investors can profit by using these dips to buy high quality stocks that go on sale.  As we move closer to February, our Investment Committee will be implementing this strategy as they look for ways to profit from the fear and panic of others.

Read this week’s Thought of the Week to learn more about the outcome 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.