FEAR CONFIDENCE
As much as markets are about fundamentals, they are about confidence. Confidence or the lack thereof is what is driving the markets down. Confidence is about trust which is built upon credibility and competence, competency of corporate management and competency of governments.
Our government is now seeking to create new legislation that will effectively address the problems caused by financial firms that led to this Great Recession. Unfortunately, we are not sure about the competency of our elected officials to create effective legislation and to restore investor confidence, nor are we certain that the financial reforms being discussed will address what really matters. What is worse is that it may actually exacerbate the problem by making it more difficult for new banking institutions to compete given more regulation and costs.
Confidence ebbs and flows. Right now, there are many stories that make that give us a lack of confidence. The new banking regulations, the Greek Tragedy, the gushing oil well in the gulf, and riots in Bangkok create a lack of investor confidence.
Use these periods of weakness to reload your investment portfolio and have the confidence to believe that the markets will return to an upward trend.