The financial markets worldwide are in flux and no markets like indecision, turmoil, uncertainty, and/or confusion. And we all know how stock and bond markets deal with bad news! On September 15th, we hear about Lehman Brothers bankruptcy filing (chapter 11); Merrill Lynch is bought by Bank of America and AIG (largest insurance carrier) is seeking to borrow $4o billion! Also Washington Mutual (WaMu) is being courted by J.P. Morgan! The Dow Jones Industrials has a large sell off (over 500 points), S&P and NASDAQ follow suit. Overseas markets suffer similar losses.
Fed Chairman Bernanke today (September 16th), decides to keep the federal funds rate at 2%. Economic growth appears to have slowed (inflation less of a worry at this time, or is it there are too many other things to worry about!?!?!?) and the labor and housing markets continue to be weak. A bright spot, unless you are a U.S. oil company hoping to continue to gouge (I mean profit) from increased oil prices, is watching the barrel dip below $91 a barrel. So, less than $91 a barrel, hurricane over, . . . . when are we going to see some relief at the pump!?!?!?! I paid $4.15 a gallon yesterday!
In a market like this the only thing I can say is focus on preserving your capital and don't take any long-term position that would be tough to liquidate! There will be "fire sales" which are great opportunities for those with the means to get in at a low level and ride the quality companies back up. Remember your asset allocation strategies, time horizon, risk tolerance and you make decisions. Never pay attention to someone who gives you a "hot tip" or rumors from a cocktail party. They rarely pay off. Part of winning in the investment game is being in first when the price is low and getting out at some point on the way up (as the exact top is too hard to predict).
So keep your head low and your wits about you - this market is very bumpy!
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