Washington, DC -- (ReleaseWire) -- 06/18/2014 -- Human beings have a natural tendency to ignore obvious warning signs at their own peril says Ms. Dawn Bennett, CEO and Founder of Bennett Group Financial Services, in her latest investment missive. She says people normally take the path of least resistance in life. More often than not, human beings stick their heads in the sand rather than acknowledge uncomfortable truths and risks. They turn a blind eye in order to reduce anxiety, to feel safe, and mostly for self-protection, says Bennett.
Instead of staying in touch with true facts and true investment strategies that could protect families and livelihoods, people close their eyes because they feel threatened, cautions Ms. Bennett.
During the trial of Ken Lay, the former CEO and chairman of Enron, Judge Simeon Lake was giving instruction to the jury and said, "You may find that a defendant had knowledge of a fact if you find that the defendant deliberately closed his eyes to what wo uld otherwise have been obvious to him. Knowledge can be inferred if the defendant deliberately blinded himself to the existence of a fact." So the judge was actually saying, "You're responsible if you could have known and should have known something, which instead you strove not to see." The legal term for this is “willful blindness”. It's turning a blind eye to the truth in our daily lives or even in the boardrooms of companies. It struck me that there is absolutely no shortage of material to prove it surrounds us she observes.
As a 30 year money manager and a student of investor psychology, she has seen investors believe and therefore act like being blind makes them feel safer when it actually is leaving their portfolios crippled, vulnerable and powerless. However, in reality, every time an investor confronts the truth surrounding their portfolio, they achieve real power and unleash the portfolio's capacity to grow during both thick and thin times, says Bennett.
She cautions, investors need a plan B for portfolios to be more defensive because this is not a ramifications-free U.S. stock market. It is full of consequences and smart investors always have a plan B for their portfolio.
Despite a string of negative corporate and economic news last week, the S&P 500 continued to move up, and with that, the VIX, a CBOE volatility index. Also known as a fear gauge, it closed below 11 for the first time since February 2007. Closing lower on the VIX is s upposed to mean less fear, yet, to money managers, a VIX heading into single digits is a sign of trouble ahead, because historically, most low volatility periods come near the end of a bull market.
The VIX closed down on Friday, June 6, 2014, below 11, and has been stuck below 14 for 30 consecutive days, the longest time period for the market's fear gauge since November of 2013.
Bennett sees this as the lull before the volatility storm and suggests investors should prepare for more volatility this year because the Fed is still in its goal of reducing quantitative easing, monthly asset purchases, by another $10 billion. This will happen June 17 and 18 in the meeting of the Federal Open Market Committee she predicts. Tightening of the Fed's balance sheet, which, if according to Fed Chair Yellen's past commentary, will be October of 2014.
She sees this as significant potential for tremendous volatility and setbacks in financial markets over the next few quarters. Investors who own the truth will protect their investment portfolios and win she says.
When there is tightening of U.S. monetary policy, there is always fallout, and this time will be no different for investors, she says. We have never seen this much expansion done on any country's balance sheet at any time in the history of the world, she laments.
According to Bennett, investors can get ahead of volatility by staying in tune with the truth by filtering through front page news and digging down to the core of the issues. She points out that U.S. economic growth ground to almost half in the first quarter of this year. Then later it will drop down further, to negative, but says and there are actually headlines in the United States that everything is better.
She says the big media spin on Friday was the economy has finally recovered the number of jobs that had been lost since 2007. Even if that were true, if you look at the labor force participation rate, it's at 62.8 percent. The last time we had a level like that was in 1978, which is when most households still were one-worker families points out Bennett.
Since 2007, 12.8 million people have disappeared from the labor force th rough retirement, disability, stopped looking for a job, and welfare recipients. Factoring in population growth, getting back the jobs lost since 2007, certainly has not been done. Most of those new jobs are lower paying, temporary, statistically created by government birth/death models that they are talking about, jobs. So it is not true reality. Why won’t the government tell the whole truth and nothing but the truth? she asks. She believes the government is turning a blind eye to the truth because they are afraid, so the American investor must be brave and take care of themselves.
George Orwell said, "The further society drifts from truth, the more it will hate those who speak it." concludes Ms. Bennett.
All market data references are sourc ed to Bloomberg terminal database.
Bennett Group Financial Services LLC, based in Washington, D.C., is a comprehensive financial services firm committed to providing opportunities to clients’ as they seek long-term financial success. Its customized programs are designed with the potential to help grow, lower overall risk and conserve client assets by delivering a high level of personalized service and skill. For more information, call 866-286-2268 or visitwww.bennettgroupfinancial.com.
Securities offered through W estern International Securities Inc. (WIS), member FINRA/SIPC. BGFS and WIS are separate and unaffiliated entities.
About Dawn Bennett
Dawn Bennett is CEO and Founder of Bennett Group Financial Services. She hosts a national radio program on www.WMAL.com called Financial Myth Busting http://www.financialmythbusting.com.
The show airs live on www.WMAL.com each Sunday at 11 am EDT. It now has over a year’s worth of achieved interviews for listeners free on-demand at http://www.financialmythbusting.com.
Dawn discusses educational topics and events in the financial news, along with her thoughts on the economy, financial markets, investments, and more with her live guests, who have included Rock Legend Ted Nugent, as well as Steve Forbes and Grover Norquist. Listeners can call 855-884-DAWN as well as take podcasts on the road and forums for interaction. The show is a great complement to Dawn’s monthly investing seminars that take place at Tysons Corner in McLean, VA, where she discusses investing.
She can be reached on Twitter @DawnBennettFMB or on Facebook Financial Myth Busting with Dawn Bennett or