It’s tough to have a long-term view on anything in this market given the volatile environment we are currently in. The future of the global economy and the stock market is directly tied to the choices that politicians in both the United States and Europe make over the next few weeks, months, even years. Despite uncertainty in the market, there are a few things that the average investor can have a long-term view on. In addition, there are a few things you should consider doing in order to protect your wealth in the coming years.
Protect Your Purchasing Power
Most people would readily agree that being exposed to only one investment is extremely risky especially over an extended period of time. That idea is the essential basis for the aforementioned trades. Most people reading this article are paid in U.S. dollars. It is no secret that the dollar has been declining in value over the past decade and even more so recently. Over the last few years wages paid to people like you and me have remained somewhat stagnant while inflation in terms of energy and food prices has risen.
As a result of increasing food and energy prices, people in general have been forced to use a higher percentage of their income on essential items needed for survival instead of making discretionary purchases. It’s hard to buy a boat when you have to pay $4 per gallon on gas just to get to work. This is worrisome not only because it is proof that corporate earnings are high at the moment and helps make a case for a double dip recession, but also because the value that each individual dollar that you own has dropped. What does this have to do with this trade?
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