Oct. 16--Local financial planners advised investors to sit tight and take it all in stride as lawmakers in Washington, D.C., continued yesterday to scramble to avert a threatened government default on its debt.
Peter Andersen, chief investment officer at Congress Wealth Management in Boston, went so far as to dismiss the idea of a default as a "scare tactic" and political "sabre rattling."
"Nobody in their right mind would trigger that as a negotiation tool," Andersen said. "The tendency for the novice investor is to become anxious. But if your investment horizon hasn't changed, it makes far more sense to stay the course."
Senate leaders late yesterday took control of talks to reopen the government and raise the debt limit after House Republicans called off a vote on a proposal they had unveiled earlier in the day. The terms of a possible deal under discussion by Senate Majority Leader Harry Reid and the Republican leader Mitch McConnell were unclear last night, but previous bipartisan Senate talks had focused on allowing the Treasury to borrow through Feb. 7 and reopen the government with enough money through mid-January.
As a potential default loomed tomorrow, the New York Stock Exchange fell 133 points yesterday and Fitch Ratings announced after the markets had closed that it was putting the government's AAA bond rating on watch because of uncertainty over the debt limit.
Adam Banker, a spokesman for Fidelity Investments, the nation's largest manager of money market mutual funds, said: "While we have confidence that the U.S. will make payments on all U.S. Treasuries, to avoid even the remote possibility of minor delays in payment, we have made small adjustments to our money market fund portfolios. Fidelity's money market funds do not own any securities issued by the U.S. Treasury that mature in late October, and we have increased the amount of cash in our U.S. Treasury funds."
Meanwhile, Gov. Deval Patrick said the state will not use its money to reopen national parks or pay for other federal services.
"We don't have that kind of money," Patrick said. "There is no way that our state is in a position to make up for the gap in spending from the federal government. We need the government, the federal government, to be opened and fully functioning the way a first-world country ought to."
Antonio Planas and Herald wire services contributed to this report.
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Original headline: Experts: Sit tight in debt scramble
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