GLOBAL TURMOIL AND YOUR INVESTMENTS Last week the sages at Morgan Stanley observed that European debt spells big trouble for the US and the stock market dropped by over 400 points. This is definitely an emotion-driven piece of nonsense. Why are we listening to Morgan Stanley? These are the folks who packaged all those toxic loans (We call them NINJA loans - No Income No Job or Assets) pushed them on their clients, bought such huge chunks of it themselves so that when those misdeeds came to light in 2007, it precipitated the financial crisis and required the government to bail out Morgan Stanley to the tune of billions - large chunks of which went to bonuses for the crooks and idiots who caused the whole thing to begin with. Ah! only in America! Okay, now having vented a bit, let's get to the root of the overseas problem: With the US economy slowing down and the long term burden of government debt, slowing global growth now looms as well. In Europe the debt problems are growing (That's going to be us for sure in 5 to 10 years if we don't fix our own debt issues.) Debt problems in Italy and Spain are causing major bond-buying by the European Central Bank in order to contain interest rates. All this dampens growth in Germany which is driven by exports and pushing France to tackle its own debt problem by cutting back on public spending. On the other side of the coin, superfast growth in emerging markets like China, India, South Korea, Brazil is causing accelerated inflation (6.5% in China as of July) and excessive speculation in real estate and other assets, all of which could lead to some kind of crash. In order to dampen this accelerated growth, governments are taking steps such as increasing required bank reserves, tightening of stock trading rules, raising interest rates, taxing bank lending, and cutting back on government spending. The results will be slowing global economic growth to somewhere between 3.5% and 4.5%, about 5% less than last year, which in turn will bite into American exports. With slowing US economic growth to about 2% at best, expect the global slowdown to shave about 0.2 to 0.4% from US Growth. So let's get to the bottom line for all of us: What's it mean for our investments? Well, the main thing is we're in for more roller coaster rides in the markets and the most important thing we can do is not let it needlessly throw our investment plans in the dumpster. If you follow DABL, be Diversified, have a sound Asset Allocation, Buy and Hold and Long Term Goals, then the best thing you can do is stay put, and even, dare I say it? Invest more! You'll thank me later when everything shakes out in a year or two as it surely will. Think of the investors who bailed out in 2008-2009 when the media was screaming doom-gloom-depression, and missed the remarkable rally that returned all monies back to pre-2008 levels and added profits on top of it all. If you believe you aren't invested properly, now may be the time to review your investment strategies, something that should be done periodically anyway, in good times or bad. Otherwise, Just sit tight - a few months from now, you'll be glad you did.