Here we go again.Yesterday we witnessed an extreme reaction to the S&P downgrade of the US’s credit rating (which ironically drove investors to seek safety in Treasuries). Today’s futures are all over the place. I believe the markets are demonstrating a complete lack of confidence in our government’s ability to stop playing politics and solve our problems, as well as fear over the even more severe problems in Europe. The problems of the 2008 crisis were never fixed, but rather shifted and covered up. Living through this kind of market pain is not fun, for sure. It hurts, it’s ugly, and it stinks. But going through this ugliness may be what is necessary to finally fix the problems that threaten to destroy our country if we continue this trajectory. My hope (and prayer) is that Congress will have the wisdom and courage to do what is right, not what is politically expedient, for the good of our country. Here are a few resources I’ve come across that you might find helpful, including my commentary from the Pocono Record:
Market Turmoil: Stay the Course or Sell the Farm
Pocono Record commentary from Mike Savage, Gary Olson, Bill Stone, and Erin BaehrPocono Record August 9, 2011
Especially in turbulent times like this, people need to be sure they have enough liquidity — cash in the bank — to weather the storms of reduced or lost income or other financial difficulties.Cleaning up outstanding credit that is subject to interest rate increases is a good idea, too.Credit now is cheap, but that may not last, and if you have a large outstanding home equity line, for instance, a rise in rates may be difficult to handle.As far as 401(k)s and investments, people tend to be too aggressive, too much into stocks when the market is going up, and sell too easily when the market goes down.You need to have an allocation between stocks and bonds that is appropriate for your stage in life and your personality — if your stock allocation is such that violent moves in the market keep you up at night and cause you to pull out at lows, that is detrimental to your financial health.Control what you can control — your expenses, savings and credit for instance — and be rational about the things you can't control.
Smart Moves vs Stupid Moves
Bert Whitehead, founder Alliance of Cambridge AdvisorsFinancial chaos is so annoying. We are going along, wary but hopeful, and suddenly everything in the financial arena comes crashing down. The stock market drops 500+ points, the Euro tumbles, oil gets hit hard, and even gold is dropping. What are you going to do?http://bertwhitehead.blogspot.com/
Why this Crisis Differs from the 2008 Version
WSJ.comIt is a parallel that is seducing Wall Street bankers and investors: 2011 as a repeat of 2008, the history of financial turmoil playing in one endless loop.Why this Crisis is Different