Saturday, February 28, 2009

Stock market actions should be observed with steady hand

Yesterday, we learned that the fourth quarter was worse than we thought. In fact, it was the worst in 26 years. We thought our economy shrank 3.8% but learned it actually shrank 6.2%. Not too surprisingly, the stock market was disheartened and lost even more wealth.

The perspective of time is everything. When we were originally told last month that the economy shrank 3.8%, we were expecting to be told 5.5%. The stock market liked that and created wealth that day.

The stock market can be expected to over-react, which emphasizes the importance of not obsessing about any one report or any one day’s performance. If you have a real life outside your portfolio, this is a particularly good time to enjoy it!

Friday, February 6, 2009

Job loss mounts worldwide

The Jobs Report this morning showed another 598,000 Americans lost their jobs, the most in 35 years. The unemployment rate jumped from 7.2% to 7.6%. Totally heart-breaking! Don’t look for foreclosures to slow down . . .

So far in this recession, 3.5 million of us have lost our jobs. But, that pales in comparison to China, where some reports indicate 26 million workers have lost their jobs. The possibility of social unrest there should not be minimized. As they are our second most important trading partner, we need them to stay healthy enough to buy our goods, as well as to keep buying our Treasury debt.