It is Rough Out There

Balatarin
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Feshangi
by Feshangi
18-Mar-2008
 

It looks like the whole world is in a mess. Everything that can go wrong is going wrong. I am not talking about the political world, but the financial one.

Since the physical world has gotten smaller and everyone is trading with each other, when one country gets a cold, some of the others may too, get sick. The creation of this financial melting pot is actually a blessing in disguise. If this were not the case, we in America, would have been in a much worse financial situation. We are saved by this corporate and financial geographical diversification. If for example the demand for certain goods or services are low in one location, it is offset by higher demand in another. The corporations make sales and financial deals and hopefully everyone benefits.

I am neither a stockbroker nor a serious investor. I see myself as a casual observer of the financial world, specially of the American stock market. The market has been acting like a yo yo in the past recent months. There seem to be no rhyme or reason. One day the stocks are up and the next day they are down. It seems to me that there are people who buy or sell large numbers of shares just to create trade. For this reason, I am a proponent of buying shares in great companies and holding on to them for a very long time. To be a trader, you will be just a little dinghy in the rough seas. This erratic fluctuation is also a telltale of the lack of investor confidence and nervousness.

The Federal Reserve has tried to assure the world that the US economy is sound and its financial markets are and will remain intact. To this end, it has been been cutting rates in the recent months. These cuts have been too little and too late. But one effect they have had has been to lower the value of the dollar. This has been one of the reasons for the price of oil to climb over $100 per barrel. The Federal Reserve has also tried to assure everyone that they will stand behind all the financial institutions and will inject new money if need be. With only $920 Billion in assets, the Federal Reserve will not be able to do this if other financial institutions fold as Bear Sterns did over the last weekend.

Yes, we are in uncertain times. Times we have not seen for over seventy years. But I also believe that our present financial world is not the same as it was in the 1930s and we will pass and overcome these rough times.

Balatarin
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Feshangi

Have patience

by Feshangi on Wed Mar 19, 2008 09:30 AM PDT

Dear IRANdokht, 

 

I am sure you will have your million dollars when you decide to retire. And I hope it will be a long time before you decide to do so. Since work is the best antidote for death. 

 

You have asked me for specifics. It is very difficult for me to give you advice without knowing about you. But I shall be very glad to give some generic advice which I think will work for everyone. 

 

I think it is a good idea to have one's bulk of investment in exchange-traded funds, (ETFs). This will provide you with diversification. You can choose from hundreds of ETFs. I particularly like the following: EEM, EFA, and IWN. As for great companies to invest in, I think you can put a small portion of your investment dollars into companies like: General Electric (GE), Bank of America (BAC), Johnson & Johnson (JNJ). If you want income or want to reinvest the dividends, you can try ERF with the current yield of 11.8%.

 

I hope you will find the above useful. 

 


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jamshid

If something goes wrong a

by jamshid on Tue Mar 18, 2008 05:39 PM PDT

If something goes wrong a la 1920s style, then your cash will become as worthless as the paper it is printed on.

Time to buy some gold or other real assets? I think it's too early to tell. But the problem is that these bankers are so clever that they won't let you find out anything until it's too late. I guarantee you that even if you are carefully following the news, you won't know when is the right time to make a move. You'll find out only when it's too late.

These bankers are clever folks.


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default

It is Rough Out There

by nader1 (not verified) on Tue Mar 18, 2008 01:42 PM PDT

Its OK. America will have another war and the economy will get better. The more people they kill the better stock market performs.


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farokh2000

It is a mess

by farokh2000 on Tue Mar 18, 2008 12:43 PM PDT

Thanks to the Brain Deads in control of this country for the last 8 Years, the entire Economy is in so much mess that if it doesnot go in total Depression, I will be surprised.

There is no backing for $$$ and with all the Billions in deficit and the Housing Market in the garbage, there is no reason for the Markets to be optimistic. No matter how much they cut the Interest Rates, it will make no difference. They have burned this down and there is no help insight.

I am not a pesimist but see no sign of recovery any time soon.


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IRANdokht

not money-wise...

by IRANdokht on Tue Mar 18, 2008 12:21 PM PDT

since I am not very wise when it comes to investments and financial matters, would you be kind enough to give me a hint as to which companies you are calling "great" and worthy of investing in?

when I first started my retirement plan a long time ago, they told me, for my age and the rate of savings I would have no problem retiring early with over a million dollars in my 401k!

now it seems that I have to be working for at least another 25 years and I will never see my retirement funds that high

so much for those investment tips...

IRANdokht


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