Dubai Default Sends Markets Lower

The United Arab Emirates country sent markets lower Friday on news of credit default. While many investors took a negative view and headed for the exits, others are taking a wait and see approach. While bad news for Dubai, it does not necessarily mean we need to reassess the credit quality of the rest of the world. A flight to safety would send the U.S. dollar higher and oil prices lower. Personally I think we should take it for what it is, another warning to investors of credit riskiness involving emerging markets. This is certainly nothing new and definitely not the end of the world or of the stock market. Emerging markets have always been high risk for credit defaults and will likely continue to be so. While the U.S. and world economies might be affected to a certain extent, they can and will go on.

So what does this mean for investors? With some questioning the sustainability of the recovery in the U.S. stock market, this could provide the correction they've been looking for. Although I believe any correction from Dubai's credit default will be temporary and mild. It would take further bad news to create a serious risk to the stock market overall. Personally I'm thinking a drop in U.S. markets could provide buying opportunities for those with enough intestinal fortitude to brave the volatility that's sure to result. It seems that any form of bad news from anywhere in the world seems to send investors into a panic. I think we might all be better off without cable news channels spouting their predictions 24/7, although I have to admit that I like watching them as much as the next person. It's just that I take it all with a grain of salt. I make up my own mind when it comes to investing, as should everyone. It helps to keep in mind that no one is able to predict with any great accuracy where the market is headed. While so called professionals may be spouting their prophecies of doom and gloom, chances are very good that they're entirely wrong.

Personally I'm going to be looking for any dips in the market to add to my portfolio and retirement accounts. If others panic over developments in Dubai, all the better for me.