Are You Prepared For Government Shutdown With Your Investments?

Here we go again.  The U.S. Government may be forced to shut down some time this morning.  This time around it seems a little more like it might happen.  Here in Illinois we have seen some of our neighbor states face crisis that caused that state government to shut down for periods of time.  The end effect was more embarrassing than anything for that state.  Things got back to normal pretty quickly.

But a potential U.S. Government shutdown is much more serious.

No one knows what is going to happen if the men and women in Washington, D.C. fail to raise the debt ceiling.  If the U.S. Government runs out of money to pay its bills on time, there is no known answer to that problem.

Even the people on TV and in the print media who get paid to know what is going to happen next have no real idea what is going to happen next (if you did not get it, that is a joke; the media barely knows what is happening now – not to even mention what might happen next).  A slow economy, high unemployment, and a housing crisis over the last few years have all failed to get the attention of the people who govern this country.  The last federal government shutdown in 1995 was a mess for investors, and in my opinion we were had lot stronger economy in 1995 than we have now.

The Republicans are threatening to shut down the U.S. Government because they want to stop ‘Obamacare’.  The Democrats and the President don’t want that to take place.  Caught in the middle are stock and bond market investors like you and me.  All we want to do is save and invest some money to pay for college and retirement.  A nice vacation once-in-a-while would be fine too.

The U.S. and world economies are all watching.  Even the professional investors are nervous.  Now would be a great time to not take any more stock or bond market risk than you are comfortable with.  I have told my clients that if 2013 ended today, we would have had a great investment year.  Some of my clients have decided that makes sense now.  They don’t want to take any more unnecessary stock and bond market risks going forward.  When the risk going forward is unknown, most times it is not worth taking those risks.

Let the individual investors who are not paying attention now take all the risks.  Pay attention now.

Cheers,

Ed Downey