Saturday, January 26, 2008

Week In Review - Too Much, Too Late

Wow! What a week. It was a quite an exciting one for the financial markets. Here were the key events:

  • Bernanke blinks. On January 22, 2008, the Fed cut the fed funds rate by 0.75% from 4.25% to 3.5%, the largest cut since records were kept in 1990 and the first change between meetings since 2001. Currently, the Fed is expected to cut interest rates by another 0.50% at next weeks meeting. Quite a change from the Fed's position in August, 2007 which indicated that no action was needed.

  • Wild market volatility.On January 23, 2008, after being down almost 300 points, the Dow reversed itself in the last three hours and closed up 298 points. Some are claiming the bottom has happened. Others are claiming the bear market has only just begun. Either way, watching the market gyrations has been exciting. Trading in this market is better than ________. (Put in your own noun. My noun is "blogging." :-)

  • Politicians working together. The Stimulus Package of 2008 has been announced, after three days of discussion. If only the parties could work together regularly and get things done this fast, think of how much government waste could be avoided. Next week Congress will put their arms around their colleagues and sing "Kumbaya." :-)

  • Overall, I think the actions of the past week were too much but too late. Short term, I expect the stock market will rally, especially if there is an interest rate cut, good jobs report and good company earnings in the next week. However, I expect the stock market to decline further before reaching a bottom later in 2008.

    For now, I continue to hold my current positions and have made 20-25 share purchases of five new stocks, Intuitive Surgical, Priceline, Apple, Research in Motion, Core Labs, and added to our position in Google. If the market rises next week, I may sell some shares, at a gain, into the rally. If the market declines, I will hold the positions but make no additional purchases until there is a clear bottom.

    For more on Reflections and Musings, check back every Saturday for a new segment.

    This is not financial or investment advice. Please consult a professional advisor.

    It's been over four years since I started My Wealth Builder. As I think about topics to write , I often remember, "I've written about that before," and decide to find a new topic. However, since many principles of personal finance are timeless, I want to include them in a recent post on My Wealth Builder. Therefore, I have started a series called "Timeless Articles from the Archives" and am highlighting posts from the same week in 2007-2010.


    Continual Growth and Reinvention - Here's one way to avoid becoming obsolete.

    On-line Bill Paying Services -Save Money, Time and Reduce Stress - Electronic bill paying is a great banking service because it benefits me.

    Assisted Living - Pros and Cons - These were some of my thoughts as my mom moved to assisted living.

    Retirement Planning - A Staged Approach - Before the housing crash, here's how I was intergrate home ownership into our retirement planning. Even after the housing crash, it will till work for us.

    2008 -update

    Statistics and Probabilities Can Be One's Friend - Using a strategy that is validated by the statistics and probabilities will eventually pay out.

    Retirement Expense Planning - Allocation To Fixed Income And Cash - Fortunately, in early 2008, we funded four years of retirement expenses with short term fixed income investments and money market funds.


    Choosing Between Taxable and Tax Deferred Saving Accounts - I've summarized my view of the tax treatment for tax deferred and taxable saving accounts.

    Teaching Delayed Gratification Skills - I believe that delayed gratification is an important life skill.


    My Incentives to Work in Retirement - While I still work for pay, the incentives for choosing the job are often other than money.

    Remembering my Time is Precious - I want to get the most out of the time that I have.

    It's the People's Government, Stupid - I want elected officials who will serve all the people.

    To me, the content of these posts are still relevant today and worth reading again.

    For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

    This is not financial, career, investing, political, retirement or saving advice. Please consult a professional advisor.

    Copyright © 2008 Achievement Catalyst, LLC

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