Good week for the worldwide markets!

There is a lot of speculation on Wall Street, Main Street and throughout the global financial world as to if we have hit bottom.  I personally believe we have (for me it was when we hit below 700 on the S&P).  Now, this is not to say that we will not still be on a huge roller coaster ride for the next few years, especially as it only takes a hint of bad news anywhere in the world (or a stray comment from Obama, Bernanke, or anyone else in Washington) to knock the market down hundreds of points.  However, the month of March has shown us that all we need is a little positive (or less, reduced negative) and the markets will slowly rise.

Wall street is about speculations, perception, and prognostication --- rarely if ever about reality.  Although it operates on the basic economic principles of supply & demand, those who participate have a tendency to like extremes and quick reactions!  There is a feeling of "panic" that someone is going to miss out on an "up" or "down" chance and the "herd" mentality is rampant.  Those who generally make money do so when they go in a different direction than the herd.  It is difficult to have the patience and the faith when all logic tells you that you are so wrong and everyone else is right.  You need to take emotion out of it and do your homework to get back to that long-term focus most of us need to have to be in this market.  Timing is everything.  If you were close to retirement a few years ago, proper financial planning for retirement would have told you to take some money off the table (equity markets) and have less than 50% of your money in the equity markets.  Though bonds did take a hit in this market, they generally come back faster than the stock and stock funds (assuming no bankruptcy of the issuer of individual bonds), and short-term debt plus cash would keep you in good shape and you would not have been hit too hard during the last year.

There are a lot of good investment options out there both foreign and domestic, stocks and bonds, as well as other areas like real estate (many areas of the country are on sale 50% off).  Retirement planning in the traditional sense, was still viable, may need to consider a slightly different approach.  Check out the retirement plan adjustments you should consider.

You should be continuing to invest in your 401k, 403b as well as any traditional and Roth IRA accounts.  Dollar-cost or Value-cost averaging will assure that, over time, you will get good cost structures for your investment dollar and make sure that you don't sell out at the low and buy in at the high!

Ah . . . As the Financial World Turns

When I was a youngster, before my mother went back to work, she would watch soap operas on television.   I remember three specifically: As the World Turns, General Hospital and Days of Our Lives (". . . like sands through an hourglass, these are the days of our lives").  It is inevitable sitting on the couch, that you may glance at the television to see what all the fuss was about.  Though I remember very little, I do recall that you didn't need to watch it every day.  If you disappeared for a few days (or even weeks) and then came back to watch an episode, you could really "catch up" pretty easily.  There was not a lot going on that would change day to day.  I think this has been happening with our current financial crisis and the financial markets in both the U.S. and abroad.  That is . . . until the last week!

U.S and foreign stock markets have been enjoying about a 5 day rally, with a lot of companies (banks and financial institutions) showing very positive growth.  The retail sector, though not great, did not suffer as bad in February as many analysts expected, so that is considered positive in this market.   Commodities have moved very slowly (both up & down) with gold back under $1000 and oil hovering around $47 a barrel.

I think it is too early to call a market bottom as this market would do an about face faster than a tornado moves through a trailer park if there was any bad news!  However, this is still going to be a business-led (not a consumer or government-led) turnaround.  General Electric has lost the AAA rating on its debt for the first time, and there is speculation that it may spin off GE Capital (though CEO Immelt says no).  The cutting of the AAA credit rating leaves only five U.S. industrial companies with AAA ratings:  ADP, Exxon Mobil, Johnson & Johnson, Microsoft, and Pfizer (this one is on a credit watch since the end of January).

Fed Chairman, Ben Bernanke thinks it is possible to get out of this recession by the end of the year, assuming the politicians are ready to act.  He did admit the unemployment will not be "fixed" by then.  He also questions whether Americans have the stomach for the continued support (read bailout!) of the financial markets and some firms such as Citigroup and AIG.

So . . . . what does this mean for the average consumer???  Well, if you have 10+ years to go to retirement, you are probably still investing in your 401k retirement plan and should continue to do so (even if you employer has stopped matching), as this is the type of market environment where you can make some money!  If you buy stocks and bonds now, you are buying them on sale, and who doesn't like a good sale!  It is a hard thing to do, as as soon as the markets look like they are rebounding, we have some bad news and things drop even further than they currently are.  I feel pretty confident that though we are sure to have some drops, the general trend is positive.  However, you know your risk tolerance, your time horizon and what your gut tells you to do.  Me . . . . . I looking to get back in to certain stocks that appear real attractive right now - do your homework, maybe you can find some as well!