March 3, 2009

Current Investment Options

There is no other way to explain the current financial markets other than dismal. Absolutely dismal.

I have some commentary below, but I wanted to review a few items on the allocations.

  • Diversify! You have heard it many times before, but it is so important.
  • Pay attention to your risk tolerances. If you are having trouble sleeping, move some more back to bonds and cash. I would still stay away from the fixed annuity. The interest rate is pretty good, but the timeframe to actually be able to withdraw the funds is the killer.
  • The bond market even with the current stock market has started to improve. The movements by The Fed has injected liquidity like never before, and the global response has helped tremendously. It is not back to "normal" yet, but it is progressing (fixed income was recommended in January).
  • Research, research, research! It can be confusing, but the more knowledgeable you are, the better decisions you will usually make.
  • This is not the end of the world. I know it is hard to believe, but America will survive. As Warren Buffett's letter to Berkshire Hathaway shareholders said over the weekend, "Our country has faced far worse travails in the past," he said. "Without fail, however, we've overcome them."
Current Comments

The stock market hates uncertainty, and the new administration and Congress have kept everyone guessing. Housing plan... yes or no? Still no details there. How will the second $350 billion in TARP funds be used? Not much clarity there either. Raising taxes? Clarity yes, but is this the environment to take available capital away from consumers? You get the drift. It is not all Obama's fault obviously, so please do not jump to that conclusion. What we need though is some real direction, and thus far, it has been lacking.

The stimulus finally passed, and it should start to breathe a bit of life back into the economy. Hopefully some of the targeted tax cuts will work quickly, and then the stimulus spending will kick in. On that front, let's hope the billions thrown at Education will be used accordingly.

Tough times are ahead, but the country, economy, and market have been through worse, and they will pull through again.

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