Author - Dana J Hornquist, CFP®

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Why the U.S. Debt Downgrade Could Mean Higher U.S. Stock Returns
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Why Holding Cash May Not Be as Safe as You Think
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How Stock Markets Have Faired After Previous Economic Crises

Why the U.S. Debt Downgrade Could Mean Higher U.S. Stock Returns

Last week we came across an “Economic and Policy Watch” update prepared by a major investment bank that reviewed recent government proposals to address the nation’s funding crisis. Titled “It Just Gets Worse,” the report chided policymakers for actions that “look like a poor cover for loose money, rising inflation, and fiscal problems,” and warned that “government financing needs are corrupting monetary policy.” As a result of these ill-advised tactics, the bank had turned “more negative” on the outlook for financial stability and saw “little hope of improvement in the inflation/currency mix.”

Amidst the barrage of news coverage from dozens …

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Why Holding Cash May Not Be as Safe as You Think

Investors may have good reasons to hold cash to keep a portion of their assets liquid. But they should understand that holding cash has a price in real terms. Investors ultimately may lose wealth even as they try to protect it.

Since the onset of the financial crisis in late 2007, the Federal Reserve has used interest-rate cuts and other policy tools in an effort to fuel economic growth. Economists can debate the effectiveness of these policies, but everyone can agree that today’s low interest rates are a two-sided coin.

Consumers, businesses, and government all benefit from low borrowing costs. …

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How Stock Markets Have Faired After Previous Economic Crises

The 2008 global market crisis and the struggling economy have left many investors fatigued. Despite two years of strong equity returns, some investors have been slow to regain market confidence.  Many are accepting the talk about a “new normal” in which stocks offer lower returns in the future.

The concept of a new normal is anything but new. In fact, throughout modern history, periods of economic upheaval and market volatility have led people to assume that life had somehow changed and that new economic rules or an expanding government would limit growth. What they could not see was how markets …

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