Markets in Turmoil: What Should You Be Doing?

Kevin, you're wrong, and I think this article misses the main point. As a fellow financial advisor in town, I hear your words "common sense prevails" and laugh at the notion that the oil markets or stock markets, for that matter, are in any sort of a predictable state. Neither you or I have any place as a professional to give advice at the moment, nor is this any place where common sense makes any sense. By the time your story went to press oil has a history making day soaring, on Monday, higher, than it ever has in one day, to 120/barrel. Supply/demand or whatever you want to call it, there is absolutely no certainty with any of this stuff and not you, nor I, are any kind of prophet, seer, or gifted. This is just blind luck.

In addition I do not have any faith in my government to fix this problem. Paulson and Bernake have overstepped their authority and turned capitalists markets into socialism. They are just propping up an already failed system. The government needs to step back and let those folks that took gigantic risks swallow that pain. I shouldn't have to pay for that and neither should the rest of the tax payers. Why aren't talking about the billions, if not trillions, that will be shouldered upon us, our children, and grandchildren. It's disgusting and you act as though government intervention will save the market.

Kevin, you seem like a nice guy, but your optimism about, "being in it for the long haul" is going to hurt a lot of people. It's as though you have a bias toward the market going higher. Is that because you are still in the market? Do you really think that things are going to get better before they get worse? "When the market recovers"?? Really? Seems pretentious of you to know the directions it is going. Let me tell you what this article should have said; "Get out of the market folks." Take a breather. No one has any clue where things are going. Never put to much trust into your own governement. That is the most humble advice any of us in this field can offer. The smartest investment professionals in this business have almost all completely folded. What does that tell you about the little guys trying to give advice?

Actually, its the people in the press that keep saying to get out of the market and the pessimism that caused all this in the first place. As you say surf guy, "Neither you or I have any place as a professional to give advice at the moment" and "not you, nor I, are any kind of prophet, seer, or gifted". So why are you giving advice?

AShaw, pessimism and negative press caused this? I don't have a response to that. Are you kidding?

As far as my advice, if you like to gamble money, go to a casino. At least there you'll get free drinks.

Regarding financial guidance for younger people, I've found Paul Merriman of Merriman Berkman has information worth considering. His site www.fundadvice.com has lots of great free resources, plus he has a weekly podcast (internet radio show) that you can download to your PC or iPod for listening.

For very serious investors, the show can come off as a bit corny and simplistic - but I think they do a good job of reinforcing the fundamentals. They also have model portfolios based on popular fund families and even ETF's. And for those of you with 401k's who are curious how your own company's plan stacks up against those of other companys, Merriman has listed the plan offerings of many large employers.

If you're a fan of modern portfolio theory (i.e. diversification) and people like Harry Markowitz, Bill Sharp, WIlliam Bernstein, etc. and aren't into market timing, then this site will probably be compatible with your investing philosophy.

sbsurguy wrote:

"... The government needs to step back and let those folks that took gigantic risks swallow that pain. I shouldn't have to pay for that and neither should the rest of the tax payers. Why aren't talking about the billions, if not trillions, that will be shouldered upon us, our children, and grandchildren ..."

I haven't formed a defendable opinion on the bailout issue yet. But I just watched Charlie Rose's interview of Steve Pearlstein (Pulitzer economics columnist for the Washington Post) and Princeton economist Alan Blinder:

http://www.charlierose.com/shows/2008/09...

And the entertaining Chris Matthews interview of Pearlstein and of all people, Jim Cramer (yikes!):

http://www.youtube.com/watch?v=m7PFcI1p5...

The jist I get is that the evolving "bailout" is a lessor of two evils. If there is not active intervention to get the credit markets moving again (yeah, its not all about mortgage defaults) then the economy will be in worse shape than if a plan is enacted. In other words, if responsible institutions are allowed to fail (i.e. take their free market come uppance, if you will) it will drag the economy down and take lots of innocent people with it. That seems at odds with your position.

As evidence, the example was cited where McDonald's just lost a corporate credit line due to the credit lockup. This credit is usually extended to franchises to make capital improvements on their operations. To my thinking, that's reaching pretty low into the economy and outside Wall Street.

Another point of contention is the taxpayer's financial risk. Based on what I've heard, its not necessarily trillions to be thrown away and never seen again, the ~$700B will be used to purchase assets, perhaps 70% to 90% of which are solid, with a debatable 10% to 30% (you pick a number) that are riskier. Depending on what will be paid, the taxpayer might make a few $100B or lose a few $100B, but that risk is being weighed against a widespread and large-scale downturn in the economy.

Well sbsurfguy, that's what I'm hearing these days. Comments welcome.

Hi EastBeach:
A lot has happened during the past week, since I made my first comments, and the bill will probably get passed tomorrow. People have opinions about the financial crisis and about the bailout. Most of what I have read is in favor of some government intervention/bailout. At the moment I don't know what to make of it all. I have conficting feelings about it. On the one hand, I don't want to see a complete fallout in the financial system. I realize businesses need to get loans to carry on as usual. No loans probably equals no payroll down the road. That would hurt a lot of people. I don't want to see that. While at the same time, I don't think that rushing to get this bailout passed is the smartest approach either. My comment earlier about this being more than 700 billion is that I don't think it stops there. Well, it's almost at a trillion already. You have Fanny Freddie, AIG, the Banks, and now the auto manufacturers. Should we loan money to people that got us in this mess in the first place? Maybe, but maybe not. Are those assets, worth anything as you suggest they are? Maybe, but maybe not.

Do people have any clue of the extent of this crisis? I don't think the average american has any idea that we could be on the verge of a major financial meltdown.
After today's market action I feel wiped out by it all. I'm tired. I remain vigilantly concerned about the markets. My advice, stay clear for a while. Maybe a long while. Not that anyone should be listening to me. Carry on . . .