News came out yesterday to suggest the federal government might not return to a surplus after all (we never expected it to). As the Australian reports:
‘The nation’s finances are facing a deep structural challenge that could turn Labor’s promised budget surplus into a $20 billion deficit, as economists warn that further tax hikes and spending cuts will be needed to bring the accounts back into balance.‘
Or even more likely, that the Australian government will go further into debt – something we warned about more than three years ago. We said that the government would have an incentive to increase the debt load because they could say, ‘At least our debt levels aren’t as bad as elsewhere.’
To be honest, it pains us that we’re still writing about meddling and debt-laden governments nearly five years (that’s right, five years) after the world economy almost collapsed in a heap in September and October 2008.
It’s one reason we try to focus on the important things in the economy – revenue, profits, dividends, growth, entrepreneurs, technology, science, and all the rest.
Unfortunately, from time to time we do have to look at the crazy macro-economic picture. But not for too long. The last thing we want is to suffer from Macroparalysis. That is, being too afraid to invest (or punt) on stocks for fear of something going wrong.
Besides, another reason we try not to focus on all that stuff is because despite all the macro-economic nonsense, we’re positive about the future. Whether it means things will get worse before they get better, we can’t say. That’s why you need to be an active investor.
That doesn’t mean you should ignore macro-economic events. You only do that at your investing peril. But equally, it’s just as important to put them in perspective and develop strategies to profit, combat and protect your investments from these events.
If you do that and keep a good balance between taking advantage of the positives and protecting against the negatives, you’ll find your portfolio will grow nicely over the next 12 months…regardless of what happens to the world economy.
Cheers,
Kris+
From the Port Phillip Publishing Library
Special Report: How to Buy Better Stocks
Daily Reckoning: More Background Noise From Ben Bernanke
Money Morning: Why the Only Thing That Matters in the Markets is Japan
Pursuit of Happiness: Working Towards Independence From The State
Cheers,
Kris
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Australian Small-Cap Investigator:
How to Make Money From Small-Cap Stocks