The past 2 weeks in the global financial markets have been “eventful”, to say the least. In the United States, Chairman of the Federal Reserve Jerome Powell indicated that interest rates were likely to go higher than previously anticipated, with higher-than-expected incremental rate increases. Financial markets were immediately affected by Mr. Powell’s comments. Later in the week there was news of bank failures in the United States with Silicon Valley Bank being the first and followed by Signature Bank. Investors saw high market volatility in both the equity and fixed income markets.

Among the few things which are certain nowadays is that uncertainty will persist in global financial markets. Hence, after a brutal year in 2022 for investing, 2023 started out encouragingly for investors as continued signs of cooling inflation fuelled expectations of a further slowdown in the pace of central bank rate hikes and eventually rate cuts later in the year. Consequently, January was a good month for both stock and bond investors. Benchmark interest rates pulled back and investor sentiment improved.

Capital Markets plays a key role in the development of an economy. To demonstrate the impact of capital markets on economic growth we will explore the concept of the circular flow of income, what is financial capital, how companies access financial capital, the uses of financial capital and the link to economic growth.

An economy consists of households and businesses. The circular flow of income follows the money in an economy, i.e., how money moves from businesses (producers) to households, back to producers and again to households and the cycle continues over and over again.

Are you someone who reads all the reviews on Amazon and thoroughly researches a product before adding it to your cart and checking out? Do you research the financial institution where you are depositing or investing your money with the same thoroughness? Recent incidents in the Jamaican financial sector will hopefully make you more discerning about where you put your money.

When my clients ask me what I think about recent developments, I remind them that nothing has changed. I tell them that the same investment principles that I have reminded them of for years still apply. These are some that readily come to mind.

The need to invest your money wisely is greater than ever, and this often requires looking beyond the obvious as you must remain vigilant to protect your money. Here are some recommendations that can help you to become a smarter investor by learning to take action to protect and grow your investments.

Track your investments

The recent developments in our local financial sector have once again resurfaced the issue of risk and safety of our investments. As investors, we frequently neglect to ask the important questions that are needed to assess the safety of our banks, pension savings, investment houses or insurance companies.

Assessing the Safety of your bank/investment house

If you are approaching retirement and have actively been investing, you have probably been concerned if your portfolio statements show your nest egg decreasing in value due to the downturn in financial markets. As my colleague Dwayne mentioned last week Economists and Analysts are predicting that a recession is likely to occur this year. This is a major concern for investors who are on the cusp of exiting the workforce, but to quote Winston Churchill “Let our advance worrying become advance thinking and planning”.

There has been much talk of a US recession or even a global recession occurring in 2023. Economists and analysts are predicting that a recession is highly likely to occur during the year. Some predict a mild recession while others predict a more catastrophic situation. But what is a recession and how should you prepare for such an event?