Political environments have a direct impact upon the financial markets. The effect can be more severe than others–depending upon the instance–but politics go hand in hand with the economy, and understanding this relationship can only lead you to making more money down the road.
Let’s look at a recent example so that we may see just how these two separate facets of life interact with each other. You’ve probably heard in the news about the Malaysian airline being gunned down over Ukraine. The threat of a war in this area has negatively influenced assets all throughout Europe. The European stock markets have dropped over the last week or so, and assets considered to be safer to Europeans have gotten stronger. Gold, the Japanese yen, and government bonds have all risen in popularity over this time. But because the Pro-Russian separatists have recently handed over the black box of the plane that was shot down–a signal of cooperation between different political beliefs in the area–the European stocks on Tuesday went up in rebound fashion. [Read more...]