strategies-for-sailing-through-the-storm

Strategies for sailing through the storm

While volatility remains high, investors will need to distinguish between purely speculative trades and allocations backed by fundamental value.

By Walter Edelmann

November 29, 2007

Tightening credit conditions and the prospect of a further deepening of the housing recession in the US threaten economic growth not only in the US but also globally. The FOMCÆs Federal Open Market Committee decision to lower the Federal Funds target rate from 5.25% to 4.75% in September helped reduce market uncertainty and created a positive environment for global equities. However, mixed economic news and a continuing recession in the US housing market are likely to ensure that market volatility remains elevated. As a result, investors will, increasingly, need to distinguish between purely speculative trades, and allocations backed by fundamental value.

The FOMCÆs decision to lower the target rate acknowledged the growing downside...

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