The market’s continued erratic plunges continue to plague your retirement thanks to the fear of what the government might do next.
No one ever really knows what the future might bring. But when the future is so opaque that the fear of the unknowns overcomes the optimism of positive possibilities then little good can be expected to follow.
This applies to any endeavor – including running a business or investing for retirement.
For when companies are making plans or investors are going through a decision process of where to place retirement assets risk is what keeps everything in check. Risk keeps companies from stepping up sales or production efforts as well as hiring of new employees – as survival is becoming ever more of a crucial primary objective.
And risk of course is what keeps investors from trusting the markets or even a single individual stock as few of us can afford to lose big after the past few years’ general market gyrations.
We all need and crave certainty – particularly when it comes to capital. And in the absence of complete certainty – we can still come to measured and educated judgments that allow and justify putting money to work for our companies and our retirement portfolios.
But increasingly – even the most adventurous of business leaders and investors are becoming ever more terrified of what might be coming out of government.
This of course is completely lost on Congress and the White House that seem to think that the more that they get involved with individual companies, markets or even the whole economy that businesses will be compelled to expand and investors will put their retirement capital back into the markets.
Perhaps the current president might do well to read up more on a past president – James Madison and less from another - Woodrow Wilson. George Will did a very nice and succinct column in the Washington Post on June 3rd on this very subject.
Madison as George Will aptly summarized was focused on limited government documented in his contributions to the Federalist Papers – much inline with the founding fathers – while a century later Wilson sought to radically expand the powers and responsibilities of government.
Considered one of the leaders of the so-called progressives – Wilson’s legacy seems to be exploding with the current government which in Will’s words has as its operating motto – there’s a program for every problem.
The results are showing up repeatedly in the markets and the economy.
Take for example one of the most crucial of industries – energy. Whether it be mining or drilling – like other industries – the existing book of laws and regulations are quite clear in setting up the rules of the road for companies trying to provide for our energy demands.
Yet, as I’ve written well before the Gulf crisis and the deaths in Appalachia – when it comes to just doing their jobs the administration would rather just keep pointing fingers and campaign for additional laws and regulations.
So, instead of sending out inspectors to the other 486 off-shore drill sites that British Petroleum alone is operating just in the Gulf of Mexico – the current president is spending his time blasting away at the petroleum industry.
Just like for the mining operations under the existing regulation of the Department of Interior. Rather than sending out inspectors to mines around the nation – many on Federal land – the current president would just rather focus on other issues. And when Governors of states with troubled mines try to push for Federal action – such as in the Commonwealth of Virginia – the Administration’s appointees’ overseeing the mines actually have stepped in to deny further investigation and Federal inspections.
So, if you’re in the energy business – perhaps even running operations on Federally-leased lands – how are you supposed to know what might be coming your way. Should you invest further on safety or just keep drilling and digging. Or if you loose favor with the Administration – might you come under attack resulting in your stock getting whacked.
And that’s just in this one industry. Over in the financial markets – we have a glob of who know what inside the supposed financial regulation legislation being pushed by the Administration.
From money center banks to credit unions and even brokerage companies – all are facing a labyrinth of unknowns thanks to the fact that the current administration doesn’t want to just utilize existing regulations regarding capital and reserve requirements as well as long-standing market rules and regulations.
So, again – some banks might well thrive – while others will be crushed. And those that make it will - like their peers in other industries – do so if they have the right lobbyists getting the right audiences at the White House and up on Capitol Hill.
None of this is good for the markets.
Rather than just utilizing long-standing rules and regulations – companies in just about every industry are now facing who knows what – all at the political whims of the government.
And the administration continues to be perplexed when companies aren’t eager to invest to expand and even hire more workers.
From regulatory purgatory to healthcare policy uncertainty – to of course the big threat – the massive tax code changes coming our way next year – no wonder business investment is far from robust and no wonder that companies are scared to death to hire any new employees even if they need them.
The results have been dire for your retirement. With the markets a time of complete uncertainty – no one is able to make any sort of rational judgment as to what might be in the future for just about any industry in any market.
So, we keep going from one day whereby a few brave traders bid up some of the stock index leaders – only to see the following day whereby everybody panics at a drop of a hat or a whisper of what might be coming out of Washington – or from governments in Europe or beyond.
But perhaps this is just a secret plan by the government to keep you working. Because if you keep working – then you’re paying more payroll taxes as well as not demanding cash from the governments Social Security scheme.
And if the government were to actually encourage the economy and the markets to succeed – then where would the need be for the next big program or the next big bit of campaign legislation. Keep everybody jittery and the government can keep the new regulations coming.
All cynicism aside – when it comes to your retirement, you don’t have to worry whether your stock has a good lobbyist with connections at the White House or up on Capitol Hill. Because at the core of my way of making your portfolio pay for your retirement are investments that aren’t trading up and down like yo-yos over the speculation of what might come next out of Washington.
In The Pay Me Strategy – I focus on a core group of investments like my minibonds trading on the New York Stock Exchange (NYSE) that if you were to track them over the past month’s violent general stock market – you’d see that they all pretty much have continued to bobble along and paying their big dividends – averaging around 7, 8 or more percent.
Then there’s the collection of bonds well beyond the credit fiascos of the Euro Union or the US Government. My four global bond investment companies keep paying their shareholders big month after month – all without the drama of the US stock market right now.
The key of course in all of these is that you shouldn't bet your retirement on how the stock market might react to what the government might pull next. Instead – focus on getting paid.
Disclosure: no positions