The Winning Hand
Overview
The recent vote in Great Britain has sent panic throughout Europe. There are many banks stocks in the red after the shock from the last vote. Future money trends suggest that the market will bounce back from the latest drop. There are plenty of financial strategies that revolve around buying stocks while they are low. If you want to build your investment portfolio, now is the time to do so while stocks are down. As an investor, it is important to invest while the market is low. Too many investors get this simple concept backward when investing.
Long Term Outlook
Many European companies are still reeling from the latest shock in the market. The long-term outlook for Europe is still in question. If more countries decide to leave the union, this could result in more stock market volatility. As an investor, it is important to look at short-term volatility along a long-term time horizon. Buying into Europe is the riskiest investment possible right now. Many European banking stocks are at their annual lows. Until the dust settles in Europe, these stocks will continue to be under downward pressure.
Investing For the Future
One of the best ways to build wealth is to invest. Investing for the future is not easy, especially in the face of volatility. Future money trends show that the stock market will go up over time. If investors can stomach short-term drops, they will usually end up ahead financially. As an investor, be sure to look at companies with little European exposure that have dropped with the market. This is a great time to find values in quality American companies. Over the long term, earning a high return on these investments should not be difficult.
Central Banks
Many central banks around the world are preparing to deal with the financial problems in Europe. Germany has already lowered its short-term bond rate to below zero. This is the first time the Treasury has yielded a negative rate. As a general rule, low-interest rates should help to increase economic growth over time. If there are continued questions in Europe, expect central banks to lower interest rates in an attempt to spur growth. It remains to be seen whether this will be an effective strategy over the long term in Europe.
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