One of the most talked affairs these days is the US keeping its interest rates unchanged. It's not just the rate decision. Markets are busy interpreting the message that Fed's decision.
Concerns about a global economic slowdown were one of the stated reasons for this decision. As suggested in an article in Livemint, this is the first time that global conditions have been cited for a US rate decision. Is Fed really concerned about the global economic markets and trying to keep things smooth by not raising rates? A very myopic view may suggest so and may give a false sense of security. However, one should not forget that it is this huge liquidity that creates a perfect environment of asset bubbles. Unfortunately, the impact of Fed's decisions will not be limited to US economy, but will have ramifications for other global economies, India included.
And it is not just US. The ongoing developments in China will impact global markets and economies as well. The uncertainties in China are mounting. Currency devaluation by China confirmed the fear that something is not right with Chinese economy. And what resulted was a global sell off.
All these developments suggest that we are living in a world full of uncertainties. And with so many factors that are out of one's control and impacting the economy, it is better not to speculate on any of them. As far as individual investors are concerned, it would rather make sense to invest your time and energy on finding fundamentally good businesses. And hope for the macro factors to give you enough opportunities to buy these stocks at reasonable valuations. If you can focus on this one aspect and ignore the rest, you are likely to be rewarded well by the markets in the long term.
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