Oakdale Wealth Management on the Investor's Quandary: Reading Washington's Tea Leaves

BOSTON, March 2 /PRNewswire/ -- Oakdale Wealth Management is releasing its monthly investment update.

Wall Street, businesses, and investors alike all await the next governmental knee-jerk reaction to America's economic woes. Over the past two years, investors have devoted more time trying to predict Washington policy schemes in order to manage our financial futures. Investors are not paralyzed, but rather once bitten, twice shy. Though everyone keeps hearing that the U.S. economy has stabilized, we won't believe it until we see it stand on its own. We fear a relapse of economic weakness from the withdrawal pains of all the government stimuli.

Our historical baseline for economic normalcy has been blurred by unprecedented propositions from Congress and the Federal Reserve. Statistics are distorted by temporary stimulus. One day, Washington is bailing out Wall Street to save the "financial world"; the next it plans to blow up the very model it tried to save. Republican or Democrat, our leaders in Washington are cocooned from reality. With little practical real-life business experience, their short-sighted ideas aim to legislate away the pain. It's no wonder that the rest of us take a deep breath and look for clarity.

For average investors it is like driving on a rainy dark night, wipers providing brief instances of visibility. Unsure, you place your faith in hugging the familiar white lines in the middle of the road in an attempt to reach your destination. Suddenly, the lines start to blur and seem to criss-cross. You begin to question whether the white line are in the right place. Confused, you decide to stop at the next rest stop for a cup of coffee to clear your head and wait for the storm to pass.

Overall, an investor's best bet is to manage money conservatively, with a focus on capital preservation and income generation. Wait for stimulus-free economic figures showing sustainable growth and until then, do not be afraid to keep cash levels higher than usual.

Look for interest rates to rise as the Federal Reserve starts to unwind stimuli especially its $1.25 trillion holdings of U.S. Treasuries and Mortgage Backed Securities. Protect yourself by investing in floating rate bond funds, not fixed rate, where your principal will erode as rates rise. Market valuations appear ahead of themselves and higher rates may make it more difficult for markets to climb further. So be careful not to chase last year's winners, but rather search for companies with a strong brand and market share and if you can get dividends as well, great. Commodities may rise due to inflation but be aware they will crack if China's growth falters and/or the dollar gets stronger.

To continue our financial journey, we would like to know the government will paint the white lines down the middle of the road. Keep in mind that the journey may take a lot longer than the "experts" expect.

About Oakdale Wealth Management

James Daly, CFA, CPA is a partner at Oakdale Wealth Management (www.oakdalewealthmanagement.com), a Registered Independent Advisor based in Medfield, Massachusetts.

SOURCE Oakdale Wealth Management