Possible Effects of Global Imbalances on Investors

McKinsey & Company’s Globalization’s critical imbalances in the McKinsey Quarterly report provides a readable summary of those issues along with some implications that, though they are directed at a corporate audience, provide food for thought for individual investors.

Here are a few parts I think to be pertinent:

“it would be wise to be prepared for the high probability of future financial shocks. To do so, most companies need to become more adept at risk management and to err on the side of being overcapitalized, overliquid, and overprepared.”

By shocks they mean what is described in the next quote below. To me the implication is to hold a higher amount of fixed income with special regard to credit-worthiness. Canadian government debt seems to me to be a good bet, even better than US Treasury debt. Read More…

This article has 3 Comments

  1. Zakary Goepel

    I tend to favor investing in bio stocks and futures with focus on fixed income returns. Because of the risk in this sector i spend a lot of time studying their management. This to me is where the real emphasis out to be. I find a lot of new investors like to cut corners and follow the crowd which is always a no-no

  2. Jerry

    Not sure i can totally agree. But then i am in my early twenties and am more interested in diversing my investments into more riskier ventures. Fixed income stocks are a little safe and a bit boring.

  3. Ted

    Good article. I have been investing heavily into fixed-income funds for several years now and have been able to weather such problems as the american financial meltdown that happened some time back. No matter the time or era it never hurts to follow this advice. Holding long term you can never really lose.

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