It's the Economy, Stupid.

[Prashun Patel]

Man, is anyone as scared of the Hail Mary bailouts/buy-outs/interest rate cuts as I am?

For those of you invested in the market, are you keeping it in or bailing????

How are you dealing? As an owner of a small business I'm nervous about my receivables...

[Bill Arnold]

I'm the farthest thing from a market expert, but I know what happens in the long run. We have fairly substantial holdings in a series of diversified funds. Our plan is simple -- let it ride. No doubt, we'd be bailing and bouncing things around if we relied on these funds for immediate income. These investments are for the future and we have faith that they will grow quite well as the country recovers from this crisis.

[Ken Fitzgerald]

I will caution everyone to keep politics out of this discussion. Political discussions are against the TOS of SMC.


That being said, I'm in a buy mode in my 401K. My employer matches 50% of what I invest in my account. I will continue to buy and like Bill, I'm diversified....stocks, bonds, large cap and small cap......

I won't make a killing nor take a beating....I hope

[Jeff Craven]

Man, is anyone as scared of the Hail Mary bailouts/buy-outs/interest rate cuts as I am?

I'm nervous. There isn't a quick fix. The banks have gotten themselves in trouble, because the lending standards were too relaxed. They made risky loans, taking advantage of people and now the government is stepping in to bail them out. I think the whole banking industry is a little evil. We look to them to protect our money, but at the same time, they are trying to profit by coming up with new ways to separate us from our money.

For those of you invested in the market, are you keeping it in or bailing????

Certainly keeping it in. I won't get anywhere by bailing while it is low. The money that I do have in the market is for the long term anyway.

How are you dealing? As an owner of a small business I'm nervous about my receivables...

I'm dealing by not watching the daily ups & downs.

[Mitchell Andrus]

Ride it out.

They say the market lost 4 trillion dollars when the market fell back to 9,300 on the DOW the other day. Another way to look at it: this means that the market had created 4 trillion dollars when we went from 9,000 to 11,400. I think the DOW will bottom at 8,850 and stabilize at 9,500 until May '09. Every major industrialized country dropped it's lending rates .5% last night.

I'm holding what I've got and I'm buying more - carefully - while holding back 2 years' income in cash, not counting the kid's college funds which are off limits.

[Anthony Anderson]

Let it ride, it will bounce back. It may take awhile, but it will. Now if you plan to retire in the next five years, then make sure you have your stocks, and MFs in a safer area, IOW now is not the time to risk unless you have money to lose. Transfer/invest in staple producers/products , you can get some pretty decent deals right now, and those will be safe for the long haul. Technology and Investments are often rocky roads, but will net a greater return, if you have the foresight to get out before the big meltdown, as is happening now. This didn't have to happen, government turned a blind eye, b/c many of the politicians were seeing their own portfolios grow beyond belief, so why would they want to mess with that? Or so they thought. Now their portfolios aren't looking so good either, and now they are trying to back track. They are as much to blame as the big investment banks, for allowing this to happen. Kind of like the farmer giving the keys to the hen house, to the fox, and then scratching his head and trying to figure out why all the chickens are gone.

The economy needs to be left alone and only given life sustaining support, while it cycles itself through. This is the only way to control inflation, and to prevent the further de-valuing of the dollar. If we keep messing with the economy, the fall at the end will only be worse. It's time to bite the bullet now, rather than having to bite a missile later. What has gotten us to this point, is the Federal Reserve Chairman, both Greenspan, and then Bernanke, constantly trying to manipulate/stimulate the economy.

Basic economics, is that all economies will have peaks and troughs, it is a cycle, always has been always will. When outside forces try to prevent the troughs, especially for an extended period of time, that's when we start to see skyrocketing inflation, and the dollar begins to weaken. More money is printed to try and "fix" the problem, and the value of the dollar falls further. Get ready for this to get worse. $700b will not be nearly enough. Watch and see. But as always, after it getting really bad, it will rebound, but it will be a long road. I never thought we would see this many huge banks fall in such a short time span. There should not be bailouts, as this will only extend the period of recovery. There should be guarantees on investors money, and individual savings/checking accounts. The eye/bailout is on the mega-corporations, when it should be focused more on the small businesses and individuals. The rewards keep getting better for the fox who is raiding the henhouse. If taxes are cut, in any way, shape, or form, in the next administration, regardless, who is elected, we are in for a very scary ride. Taxes need to be increased to pay for all the spending that is happening. We cannot pay for these expenses, and are selling bonds to China, Japan, and many countries in Europe, to pay for things that we cannot afford. And we still are hearing about cutting taxes. Doesn't make sense to me. But then again, raising taxes is not popular, and people does not want to hear that.

But then again, who am I? I am no expert. These are just my opinions. Regards, Bill

[David G Baker]

If I was going to bail out I should have done it months ago. I am down around 35% and am starting to eat into my principal but I am going to stick it out. I am also well diversified and have some in a money fund waiting for the near bottom and am buying back in. This is how I made most of the money in the first place.
I am retired and have finally reached the point where I can just barely scrap by on my pensions and Social Security so at this point I don't have to take from my investments for my living expenses.

[Greg Cole]

At my age, I'm in and staying for a long while yet. At 34 there's many years left ahead of me, hopefully anyway.
I am also very thankful I am not the "typical individual" in my generation... no 2500 sq foot home for 3 people, no Escalade in the driveway per say. I live in a small comfortable home I will be able to afford regardless of almost anything, both vehicles in the driveway are paid for. We resisted the urge to move up in housing a couple years ago and glad we stayed put.
The lending standards and institutions have had too much proverbial rope and the continual deregulation really let the dogs loose and pack mentailty took over. I also look to the individuals who put themselves in such a vulnerable position, it's not always the lending institution(s), it takes two to tango.

[Derek Tuchscherer]

Amen to that Greg.

My wife and I, at early 30's ourselves are sitting in about the same situation as you...and feel perfectly content because of it.

[David DeCristoforo]

We have to get real here. If we do not come to terms with the fact that debt is not a commodity, we are never going to get out of this. I don't think housing prices are ever going to reach the overly inflated values they were at when this whole thing started to crumble. So the idea that we can buy up this debt (which we refer to as "assets") and then resell it later when prices are up again is inherently flawed. We have to restructure all of the bad debt, write off the losses and then we can go forward. This means a lot of people are going to lose some money. No way around it.

[Prashun Patel]

I totally agree that debt is bad. Debt for financing cashflow is great. Debt to finance speculation is bad.

I'm a Suze Ormond kind of guy: Pay yr debt off.

[Aaron Beaver]

We are considering moving our Mutual Fund money market account into an FDIC insured money market account. We just haven't decided if its the right thing to do or not. This money wasn't for retirement it was more of a savings account. Granted it may gain more in a mutual fund account but its not insured.

Thoughts?

[Anthony Anderson]

I totally agree that debt is bad. Debt for financing cashflow is great. Debt to finance speculation is bad.

I'm a Suze Ormond kind of guy: Pay yr debt off.

That's funny Shawn. Last I heard Suze Ormand is having a hard time following her own advice. Please don't take offense. It's just that everytime I see Ormond on t.v., I have to change the channel. She tends to rail on the people who are in financial trouble, and in fact, she has many of the same problems that her viewers/callers have.

[Frank Hagan]

We are considering moving our Mutual Fund money market account into an FDIC insured money market account. We just haven't decided if its the right thing to do or not. This money wasn't for retirement it was more of a savings account. Granted it may gain more in a mutual fund account but its not insured.

Thoughts?

You are insured against both a bank failure and the loss of your principle in a FDIC insured account. Most money market funds are also insured against a failure of the company holding them (but not against loss of the principle). But you have to check with the financial company (I know Fidelity has the insurance, but again, you can lose money if the fund "breaks the buck", but not if the company goes under).

If you are looking for a relatively safe investment that will earn more, look at municipal bonds; right now, they have the highest yield (and offer some tax advantages if you are in the highest brackets).

I feel OK with my money market funds at Fidelity. I did shift all my "immediate cash" savings into the money markets and out of the stock mutual funds. For our IRAs and 401k money ... I'm letting it ride. We've lost about a third of the value, but I don't need to cash in for another 15 years or so. "Sell low" is not a good strategy if you have the time to wait.

[Prashun Patel]

That's funny Shawn. Last I heard Suze Ormand is having a hard time following her own advice. Please don't take offense. It's just that everytime I see Ormond on t.v., I have to change the channel. She tends to rail on the people who are in financial trouble, and in fact, she has many of the same problems that her viewers/callers have.

I didn't know that. Oh well, that'll teach me to worship false idols
Anyway, her advice still resonates with me. "Do as I say, not as I do".