Market Slowdown or Strengthening Dollar

Currencies trade relative to each other, so it is understandable why we are seeing a strong dollar. The dollar is gaining as there is a flight to quality in the global markets. Investors place money into U.S. Treasury bonds to essentially hide from the grief they feel in their own economies.

A strengthening dollar should not hurt earnings as much of the turmoil has been priced into the market. A company like Costco Wholesale Corp. (NASDAQ: COST) that derives most of its sales from the United States, trades at a 25 times earnings, while Wal-Mart Stores Inc. (NYSE: WMT), with a bit of international exposure, trades at 13 times earnings. Stocks are priced on expectations of six to 12 months down the road, so any reservations about international exposure are built into the price.

Even domestically, we have quite a load of events that will likely impact our economy and stock markets, including, the Supreme Court decision on health care; the presidential election, and the U.S. debt cliff. With the world’s investors turning to U.S. Treasurys for safety, we advise our long-term investors to seek stocks for the dividends.

Time and again, we have investors inquire about Master Limited Partnerships. We feel there is not enough transparency in the operations of these partnerships. Additionally, when you receive money, you often have to question: Is it a return of capital or new money?

On the other hand, we feel companies like Southern Company (NYSE: SO), who pays a 4.25% dividend, are not going anywhere soon. Publicly traded companies are required to have transparency in their management and their financials, so we know the dividend should be well covered by earnings. With the market trading relatively flat for the past month and Treasury rates yielding all-time lows, we believe the stock market is the place to invest.

At Henssler Financial we believe you should Live Ready, which means understanding your investments and how they may act in the future.  If you have questions regarding your holdings, the experts at Henssler Financial will be glad to help. You may call us at 770-429-9166 or email at experts@henssler.com. 

Disclosures

This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.