Sushi Money

The market is soaring today and seems to like the recent aggressive action by the Federal Reserve, and that they may drop the Fed Funds rate by a full point or more today.  I sensed a change by several commentators that instead of the Fed being behind the credit crisis the past few months, they are actually now way in front leading the charge to solve the financial problems.   Which is good.  Maybe it’s not all doom and gloom.  Although there’s still a lot of disagreement about the Fed’s course of action to solve these problems over the long term.

But Fed Chairman Ben Bernanke is well-versed in Depression era financial lessons, and did a great deal of academic research on the same.  So he has studied the causes and influences of the financial problems of the 1930’s and is working to prevent the same thing from happening now.

Apparently the banking and lending industries have just about shut down over the past weeks as everyone is afraid of  doing business with another company that may go bankrupt.  Some of those fears have eased today after Lehman Brothers (LEH) and Goldman Sachs (GS) both reported earnings that were not quite as bad as many have thought, with higher estimates going forward. 

That’s all the market really wants right now… clarity for the road ahead.  And with today’s Fed rate cut, as well as earnings announcements over the next few weeks, we may have a lot more of it.   Still going to be pretty volatile, but I honestly think we’re starting to put the worst of this behind us.

“What?!” I can hear a lot of folks saying…  because it just doesn’t seem that way right now.  There’s lots of fear and near-panic in some sectors, and with housing still down and oil and commodities through the roof a lot of folks are worried.

But this isn’t the Great Depression.   Unemployment right now is pretty strong, although that doesn’t mean anything if you’ve lost your job recently.  I wish those of you the best if you’re looking for work.  Many folks are rightly concerned about where their money is and if it’s safe.  For money you can’t afford to lose- it should be in FDIC insured bank and money market accounts.

What if you’re worried about your portfolio?  Make no bones about it, I’m a long term investor with a 10+ year horizon investing for retirement.   The LA Times has a good Q&A article that tells Investors to Take Deep Breath Amid the Storm.I just think it’s not that bad, and it’s not going to get much worse. It’s like the negative press and commentary has reached a crescendo, and just when everybody finally “buys in” to the storyline about how bad it is, the market’s going to turn. 

Somewhere there’s going to be a guy on a street corner with a sign… ‘THE WORLD’S GOING TO END!” and he’ll be standing there by himself looking around wondering where everybody went.   Back to work my friend, trying to make their lives better.

Some pros even see the markets headed higher by the end of 2008.   That’s the camp I’m sitting in.  I remember the recession of ‘90-’91 timeframe.  Many politicians and folks running for election cried that it was the worst economy in 50 years.  And then it picked right up again the following year, leading to a huge run of growth through the 1990’s.  Is it different this time? I doubt it.

We’re in an election year right?  One side is going to gnash their teeth and cry about every aspect of the economy. Lately they have good reason to unfortunately.  I sure wish some of these folks would talk about what’s good in the nation and the economy once in a while, instead of everything wrong with it.  You don’t lead by shrill complaint… you lead through inspiration.  Probably why Sen. Obama attracts a lot of folks?   But one of these days the markets will turn around with conviction (today?) when the news is not quite as bad as before.   Smart money is even buying strategically right now.

“But what about the dollar?” I hear others say.  Well, let’s just say there’s a few companies here at home that really benefit from a low dollar.  But it’s too low right now, and is part of the problem with higher oil prices.  Overall however, the dollar’s going to rebound over time- just watch and see.  I wouldn’t bet against Uncle Sam any time soon.  All the press about this or that country shunning dollars. Hogwash.  Wait until the least crisis in their own country or region- guess where the money will flock to?   Right back here…  and we’ll step up to the plate and do what we’ve always done.  We’ll help them get through it too.

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