Dubai issue signals a healthier market

8 12 2009

By Jon Castle, CFP®, ChFC®

Over Thanksgiving Weekend, credit problems in Dubai shook the financial markets throughout the world. Apparently, real estate development companies got over their heads a bit and now can’t make the payments on their outstanding debt.

 Sound familiar? In this instance, the UAE (United Arab Emirates) took the stance that while they would not “bailout” any failing companies, they would, in fact, back the banks holding the paper. The US stock market dipped about 1.5% overall on the fears of yet another credit blowup – possibly igniting the much-feared “double dip” recession that some pundits have indicated is just around the corner.

However, the markets returned to healthy behavior soon after, recovering some of the losses and turning positive again today – Monday following Black Friday. In my experience, a market’s health is often measured by its ability to shake off bad news – and assimilate both good and bad news into measurable movements, up and down. In this case, given the size of Dubai’s economy, as well as the measured response from all concerned, it would appear that the financial markets are functioning normally again – highly efficient, and in most cases – random.

To your financial health!

This blog is for informational purposes only.  This is neither an offer to purchase nor sell any securities.  All investing involves the potential of loss – including invested principal.  Indices quoted are general barometers of security price movement.  You cannot invest directly in an index.  All information is obtained from sources deemed reliable but not guaranteed.  Past performance is not a guarantee of future performance.  No tax or legal advice is given nor intended.

Investment advisory services provided by PARAGON Wealth Strategies, LLC, a registered investment advisor. 

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