The Global Economy is No Match for a Capitalized Media

I am back from an extended summer vacation with my batteries fully recharged so that I can clearly visualize the direction of the global economy and its impact on the stock and bond markets. My goal with this post is to provide some educated thought on how the average investor can protect what they have and still earn a decent return on their investment while the market tosses and turns like an insomniac nearing their next month without sleep.

The bottom line is that the global stock market, with the possible exception of emerging markets, is now driven more by human behavior than economic fundamentals which is exacerbated by the media who overly dramatize financial and economic news and are not beneath doing a little fear mongering to sell newspapers and ratchet up viewer ratings. In its present weakened state, the global economy is no match for a capitalized media! I will take up how to deal with the Pavlovian response of the markets to a media gone amok in a later post.

Sadly, the lower we are on Maslow's Hierarchy of Needs, the worse the stock market's impact has been on our retirement portfolios and, with housing foreclosures rampant, many of us are preoccupied with finding a place of shelter instead of assessing the health of our portfolios. To those I say get your house in order and then make a personal recovery plan to salvage your retirement portfolio. This is critically important and must include sufficient cash for liquidity, bonds and not bond funds, dividend stocks, and some low cost emerging market mutual funds or ETFs to even things out. I will provide more details on how to structure a retirement portfolio in today's market in my September "Smarter Investing" newsletter.