How to Stay Financially Stable When the World Might Be Falling Apart

Unfortunately, rising markets aren’t necessarily great indicators of a healthy economy.

After Jerome H. Powell, the Federal Reserve chair, suggested this month that the Fed would cut interest rates, the stock market hit new highs.

That buoyed investments, but signs of slowing economic growth persisted, as did the fear that it may be too late to stave off another recession.

And though traders have been doing well, lower-than-expected wage growth, underperforming bond yields, trade wars, climate change’s effect on resource scarcity, Brexit and geopolitical tensions are leaving long-term investors still wondering: What’s the best way to stay financially stable?

Our quarterly report on investing provides some answers.

It includes coverage of some successful mutual funds and exchange-traded funds. It also highlights intellectual pitfalls that might hinder investors’ judgments, and how best to avoid them. As Conrad de Aenlle wrote in this special report, “The market has been largely unperturbed by the persistent economic weakness because each bad piece of data is taken as confirmation that the Fed will ease.”

Fed easing is usually assumed to be good for stocks. But, he argued, it may be time to make a contrary bet.

Not everyone will want to take such risks. If you’re looking for actionable advice for becoming financially independent, the author Ramit Sethi recommends three important parts: “conscious spending,” automatic savings and an understanding of why you are investing. Don’t worry about buying lattes. That’s not what’s holding you back, he said.

The world of exchange-traded funds is continually inventive, which sometimes raises difficult ethical questions. Just as there are funds on carbon credits, social media and even obesity, some funds are designed to profit off growing trade tensions. There are funds that, as Brian J. O’Connor wrote, ferret out certain companies likely to receive support from their national governments. Others invest in emerging markets but exclude companies listed in places where tensions are high, like China or Hong Kong. And some E.T.F.s seek bargains in beaten-down stocks.

“Short-term tactics aimed at exploiting trade tensions are risky in themselves,” Mr. O’Connor said. “Longer-term investing may make more sense for most people.”

At the same time, water scarcity presents a unique ethical quandary. A small group of traditional mutual funds and E.T.F.s already invest in water, and the prospect of shortages and rising costs may make this a lucrative investment. Big businesses are already hedging against climate change, and while water could become a lucrative holding, are you willing to profit from a potential shortage?

And since we’re talking about things to be skeptical about, John Schwartz wondered, in an essay, about the purpose of Facebook’s Libra cryptocurrency. Will it be a worthwhile investment, or is it even made for people like him? Or would Mr. Schwartz be better off just using a currency like Bitcoin — or even starting his own?

The rest of our report is full of analyses and introductions to investing. It may also help answer this question: What’s a long-term investor to do when the world might be falling apart? See the rest of the report below.

Graham Starr is an editor covering news and special reports. Follow him on Twitter @GrahamStarr

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