Each quarter, investors anxiously await the latest government reports on the state of the economy – hanging on every word about GDP, wages, unemployment, CPI (inflation), trade deficit, currency exchange, interest rates, and corporate profits – and then make their investment choices based on this data.
To get an idea of how Main Street investors are influenced by government choices, consider the following chart:
The chart demonstrates the amount of borrowing the government has done (through selling treasury bills) to fund the various economic stimulus programs to combat the economic fallout from COVID-19.
So far, the government has already borrowed more than $3 trillion since the beginning of the COVID-19 economic crisis – starting with the $2 trillion Cares Act passed in April that provided $1,200 stimulus checks to qualifying households and additional business relief measures.
The more than $3 trillion in debt incurred so far this year has already exceeded the total debt increase from the economic stimulus measures instituted in response to the Great Recession during the Obama administration.
By the end of the current crisis, experts estimate the total government borrowing and spending will exceed $6 trillion.
That chart screams “hyperinflation!” to the Main Street investor. All those trillions in dollars pumped into the economy will surely devalue the dollar – making the prices of goods go up – is the popular thinking.
Investors have responded to this spike in debt as expected – by flocking to gold and pushing its price to record highs in the oft-mistaken belief that gold is a good hedge for inflation.
Basing your investment decisions on what the government’s doing and how it’s responding to this and that can be exhausting.
What many investors fail to grasp is that all that worrying and readjusting can also be futile.
Hilariously, a Fidelity study from a customer account audit from 2003-2013 found that all the best performing accounts belonged to investors who were dead or inactive.
Moral of the story? All the fussing about government actions and choices is a waste of time.
- Wouldn’t you like high returns without worrying about government choices?
- Would you like steady income streams that take government out of the equation?
Make this one last adjustment:
Instead of constantly adjusting to job reports or the latest trade data as part of your investment strategy, make one last adjustment that takes government and most other external factors out of the equation.
Private investment funds managed by skilled, experienced, and reputable operators invested in a cash flowing, recession-proof asset class is the one sure way to stop worrying about government choices when it comes to your portfolio.
Cash flowing assets like affordable housing and certain productive businesses are ideal for ensuring cash flow and growth through any economy.
As the Fidelity study demonstrated, the best investments are the passive ones, the ones that take the worry and headache out of investing.
Investing in the right asset class will make sure you’ll never worry about being part of the latest unemployment numbers ever again because multiple streams of passive income will ensure you’ll never have to punch another clock.