Arguably, there are two basic outcomes to the current debt ceiling controversy: (1.) The debt ceiling is increased, or (2.) Negotiations fail and the debt ceiling is not raised. Obviously, there are a host of related issues – but if an investor is trying to figure out what to do – it may be useful to focus on the two basic possibilities.
If the debt ceiling is raised (1.) – and you did not change your investments in advance – then you were right to sit tight.
The second option (2.) is somewhat more complicated. If you think the negotiations are going to fail – and you want to move your funds to some place safe – where do you go?
Since the consequences of a failure to raise the debt ceiling are unknowable, how can you know where to go for safety?
History tells us that finally negotiations will succeed and the world will go on. That coupled with an inability to determine safe alternatives – lead us to recommend that you stay with your current investments and allocation – and ride out what storm may or may not come.
If you have any questions or would like some additional help with your portfolio, please call us.