What Janet Yellen might or might not do about interest rates seems to get put on the backburner whenever geopolitical risks are catapulted to the fore. It wasn’t that long ago when the main (if not the only) market concern was where and how quickly the US Fed would tighten monetary policy. It wasn’t even that clear as to whether the Fed chair would still be in her job, when her term of office ends in February next year. For a time, Yellen’s job didn’t look that secure. That’s because Donald Trump had once accused her of colluding with President…
What Janet Yellen might or might not do about interest rates seems to get put on the backburner whenever geopolitical risks are catapulted to the fore.
It wasn’t that long ago when the main (if not the only) market concern was where and how quickly the US Fed would tighten monetary policy.
It wasn’t even that clear as to whether the Fed chair would still be in her job, when her term of office ends in February next year. For a time, Yellen’s job didn’t look that secure.
That’s because Donald Trump had once accused her of colluding with President Obama to keep interest rates low. But now, as with almost everything that Trump says, they change as quickly as children tire of their toys.
He now claims that he likes her, he respects her and he likes it that the Fed’s has clung onto a low interest-rate policy. What a turnaround. He does more U-turns than a dodgy plumber.
But now that the US economy appears to be heading in the right direction, traders, analysts and market commentators have found something else to scare themselves, witless – geopolitical tensions.
What with events in Syria, North Korea, Europe and the possible impeachment of Donald Trump, the market is beside itself with geopolitical worries.
Not many, it has to be said, had expected the US to drop its largest non-nuclear bomb in eastern Afghanistan.
The deploying of the Massive Ordinance Air Blast – nicknamed the Mother of All Bombs – would suggest that America could be prepared to use whatever force it deems necessary, when needed.
Whether the “necessary force” extends to America’s dispute with North Korea’s over the testing of nuclear weapons is unclear. But traders have not been taking any chances.
More geopolitical concerns hang like a black cloud over the market, with talk about the Trump administration’s relationship with Russia. And questions remain as to why Trump fired the FBI chief?
Closer to home, market observers have been watching developments in North Korea and the increasingly bizarre behaviour of its leader, Kim Jong-un.
But to worry about geopolitical tensions and monetary policy and, even, economic numbers is, in my view, missing the big picture.
The secret to understanding what is going on is not by reading tea leaves. Nor is it by listening to market commentators, who might have a hidden agenda or a book to talk up.
Instead, listen to what companies have to say.
As far as I am concerned, we are worrying about the wrong things, if we focus geopolitics and economics.
Instead, we should be worried about whether we will have enough money, when we decide to retire. That should be our primary concern.
That is something within our control. It is also something that we should be working towards.
To jump in and out of the market with every political and economic twist and turn is a terrible waste of our time.
Over the long term, stock markets have delivered outstanding returns for investors. Some companies have delivered returns that are even better than the market.
So, instead of worrying about what some North Korean despot might do, or how America and China might react, our time could be better spent looking for wonderful companies to invest in.
That is what we spend our time on at Stock Advisor Singapore.
That’s because many of us will have to work longer, simply because we will be living longer. That, in turn, means that we will need to accumulate more wealth before we decide to hang up our boots.
Exactly when we can afford to retire is, to a great extent, up to us. But we are not going to reach our goal, if we allow ourselves to be scared out of the market.
So focus on the things that matter…..
….Work out where we are today, financially…..
…. Decide where we want to be in the future, financially…..
…..Then work out how we should invest financially to reach our goal.
A version of this article first appeared in Take Stock Singapore. The Motley Fool’s purpose is to help the world invest, better. Click here now for your FREE subscription to Take Stock – Singapore, The Motley Fool’s free investing newsletter.
The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo doesn’t own shares in any companies mentioned.