Now that the Greek election is over, media attention has shifted to the European sovereign debt problem. It looks to me that any solution is going to include continued low interest rates, perhaps even lower rates, for an extended period of time in an effort to restore economic growth.
Investors seem to be split evenly on the question of economic growth. Those who believe the economy is strengthening are expecting cyclical stocks, such as dividend paying energy stocks, to rebound. Investors who are worried that the economy is weakening, have parked a significant portion of their portfolios in money market accounts where they are getting close to zero interest rates.
Neither of these strategies has done well this year. The energy sector is the poorest performing sector in the S&P 500 losing almost 8% so far this year as the price of oil has fallen. Money market interest rates are currently about 0.10% a year. At that rate, a $1 million account would earn just $1,000 a year before taxes.
Click here to read the article on Forbes.
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On Saturday, June 30, my guest will be Bill Visconto who will explain how he hedges the systemic risk in a Marketocracy Master’s portfolio for institutional accounts. Click here to reserve a seat.
If you would like to discuss specific recommendations for your account, email Daniel Miroballi at email@example.com to arrange a convenient time for a call from Ken Kam.