Fear bubbles how to prepare for hurricane in

Fear bubbles: how to prepare for a hurricane in the stock market?

For the past six years
Wall Street is “sunny” weather,
stocks are growing and everything seems to be
it goes well. But some investors
are concerned that the next “rainy”
the day may come soon.
Shares already very expensive, not correction
It has been for several years, and the central
Federal Reserve – Bank of America
system – can shake up all markets
in September this year.

The only place
where you can ride out the storm – a fund
money market. It is considered
one of the most reliable investments –
it is much better than to hide their money
in a bank account. Here’s how it works:
you put money into the fund, and the manager
Fund invests in some of them
relatively safe assets:
short-term government bonds, corporate
or municipal debt. The goal – to get
work money more than if they
just put in a savings account,
and at the same time minimize the risks –
they are much lower than when investing
in shares or investing in the most
bond funds. "This often
It serves as a substitute for bank account".
– says Tim ?? Haik, chief investment
director of financial markets in Fideltiy.

Most people
invest in funds for several
months to try to compare
income with what they would have received on
bank account. People are attracted to rate
and the opportunity to win more by
changes in Fed interest rates, which,
considered by many to happen in September.

"Such steel foundations
a good alternative to other investments
lately – says Esther Chance
senior portfolio manager Invesco,
which manages funds of $ 68 billion. –
After raising our Fed,
certainly stand to benefit". increase
Rates will do two things. Firstly, any
the regulator’s decision violates the dynamics
the stock market, often scares investors
and makes investing more
safe assets. Second, the rise
investor interest in earnings on their
savings and bonds.

When the Fed established
interest rates near zero in 2008,
cash and bank accounts
basically did not give any income –
almost nothing. but historically
it is known that if the rates are
above – is expected to happen, and in this
year – the money in the funds receive
more profit than your usual
savings accounts in banks.

When selecting experts Fund
are advised to follow a few key
tips. First, decide on the type of
Fund, which want to invest
– governmental, corporate, or
municipal. As a rule, government
It is the safest. Secondly,
learn Fund rating – for example,
Moody’s or Fitch, you can see the credit
fund rating. If the fund is assigned
AAA rating, which means that it is considered
extremely reliable for investments.
Third, the study of the role and conditions
withdrawing money from the account – is not always possible
immediately withdraw their money without losing
income.

But keep in mind that
these investments do not guarantee
Safety – Unlike a bank
account that is insured by the federal
government, investors may lose
money in the money market fund. One of
the most terrible examples of what can
go wrong – a story about money
Fund «Reserve Fund» group in the United States. During
Great Recession, as they say
investors "dollar broke" and this
meant that investors will receive only
90 cents for every $ 1 they put
to the fund. They lost money. Why? Fund
I invested in Lehman Brothers, which has not sustained
crisis and turned belly-up.

But since then there have been
a lot of new rules and requirements to funds,
especially after the financial crisis
2010 – The Securities Commission and the
Exchange Commission has made cash flow
much more transparent. try
shelter from the storm in such a crisis
asylum?

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