By Scott Moser, CPA/PFS, MST

Winston Churchill once said: “The pessimist sees the difficulty in every opportunity. The optimist sees the opportunity in every difficulty.”  This quote aptly describes the predicament investors currently face.  The world debt crisis and the inability of our Congress & international governments to agree on a sensible response suggests even the pessimists may be-- overly optimistic.  Yet the current structural hurricanes affecting the global economy surely provide a platform for investors to profit from dislocations caused by rumors and the miss-information injected into media channels. 

So how should investors respond to the turmoil? 
• Don’t panic; running for the sideline when things get heated may reduce your anxiety, but in all likelihood, it will also reduce the value of your portfolio. 
• Be realistic about future returns.  Don’t expect double-digit returns in this environment.  Stock returns will not rise without higher corporate profits and it’s difficult to grow economic activity when consumers net worth, income and debt levels are all shrinking. 
• Look for opportunities to buy established companies with strong balance sheets and a history of increasing dividends that follow a business model you understand.

If you think there are money managers that can capture higher returns in the future and that you can identify who they will be, please read this article before you attempt the endeavor.