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!