Review Investments in Times of Uncertainty

With the recent market volatility, the Federal Reserve divided on its opinion of the economy’s direction and the politicians in Washington disagreeing about almost everything, many people are wondering where to invest their money.

Economists and market analysts feel we may have seen the market bottom, and certainly some stocks have reached their low. But we are not out of the woods yet and will continue to see volatility.

Most economists agree that we are not going to have a double-dip recession, but our recovery will take longer than anticipated. It could be several years before we return to normal. Historically our country has grown at a rate of 3 percent annually. We are currently at 1 percent and could continue at that level for a few more years. 

However, there are some encouraging signs:

• U.S. banks are healthier now and holding larger amounts of capital.
• Manufacturing has increased in the United States.
• Corporate earnings are great, and companies are paying off debt and investing in equipment and software designed to increase profits and streamline expenses.
• Gasoline prices are coming down.
• The European debt crisis seems to be under control.

Even restaurants are an indicator of recovery. According to Jeffrey Saut, Raymond James’ chief investment strategist, “Every casual dining company that has spoken to Wall Street has said they have seen no evidence of behavior change despite all the scary headlines of the past six weeks or so. If we have a recession, this would be the first one in my 25 years as an analyst that was not foreshadowed with weakness at full service restaurants.”

The million-dollar question is “Where should I invest?” That depends on your individual needs and concerns. This would be a good time to review your portfolio with your investment advisor. Consider your future needs, short-term and long-term, and ask yourself the following questions:

• Will you need to take income from your investments?
• Do you have any major purchases in the next three years?
• Do you need to have a portion of your income guaranteed? 
• How much risk are you willing to take for a higher return?

These are all questions that should be addressed when reviewing your investment portfolio. You may need to make changes based on future needs and goals. Most importantly, you should be comfortable with your investments.

Judy K. Alexander can be reached at (615) 744-3754 or judy.alexander@pnfp.com.