Right now we’re all hungry for an industry that can keep growing even in recession. And our recipe is one of the basics–food, glorious food.
Neil J. George
For every modern market collapse, a new bubble has emerged to take its place. This isn’t how things should work in an efficient market, but the fact is that’s been the trend.
This is just the beginning. And it won’t be too long before we look back at these moves and wonder what we were thinking. Hopefully by then we’ll have moved on to a period where Uncle Sam isn’t a partner in a seemingly endless stream of businesses and industries. But for now, as it relates to your investments, the here and now dictates that you need to gear up to invest right along with Uncle Sam Inc.
Who hasn’t experienced firsthand what it means for the S&P 500 to be down 24 percent over the last two months and 33 percent year-to-date? The market’s gut-wrenching implosion is spelled out daily, red numbers all over computer monitors, TV screens, and newsprint.
But there’s more havoc lurking. It’s not drawing much media attention–yet. Wait until investors those investors brave enough to do it open up their brokerage statements. We all know about the share-price declines, but a story that will play out over coming months is the heavy falloff in dividend income. This is the insult after the injury.
The next big bubble is already getting pumped up, this time not with easy money via the credit market but through direct investment by Uncle Sam Corp. The Federal Reserve Bank should be renamed Fed Bank, Inc.,Wholly Owned Subsidiary of USC.
We’ve never met a man who’s gone broke with regular checks coming in.
It seems everybody’s getting a helping hand. This week yet another major bank got a huge infusion of public help–$66 billion worth–to keep the doors open for at least a few more weeks.
Zurich-based UBS (NYSE: UBS), announced that the Swiss federal authority in Bern, along with the Swiss National Bank, decided it didn’t want one of its biggest banks going down for the count. Swiss authorities are supposedly taking $60 billion in debt assets with no real assumable value and at the same time buying into the bank with equity capital of $6 billion.
Chaos: That pretty much sums up the thinking on global markets. The follow-up is: Get me out of everything. Sell it; I don’t care what it is, or what the price is. Just get me out.
One market opens and folks sell, and keep selling into the close. The next market opens and picks up with the selling. As the world turns, market after market keeps selling.
Yes, it’s flat out ugly out there. Stocks are sinking, commodities are getting crushed, real estate is blindly searching for a bottom and even bonds are being bounced over fears of what might be next in the ongoing credit crunch.
It doesn’t matter what happened on Capitol Hill this week. What does matter is having a plan to get for getting past not just the next several days of ups and downs in the market but the coming year as well.
