Bankruptcy & Foreclosures

Sadly I have most always been an advocate to telling my clients to consider dabbling in the stock market when they ask for advise in investments with fairly immediate returns.

Recently economic instability has caused some pretty ugly affects on the stock market as individuals fear these patterns are a long-term situation. Investors reacted nearly instantly to Federal Reserve Chairman Ben Bernanke’s announcement that economic conditions are likely to worsen before they improve which caused a slump in stock value.

Today, things didn’t improve. In fact at the time of this posting, stocks further slid this morning. Sadly this comes despite Bernanke stating that the economy should avoid a full-blown recession thanks to the fiscal and monetary policy currently in action. We’ve witnessed the effects of these policies through the government’s $170 billion fiscal stimulus plan (tax rebate) and recent interest-rate cuts.

No need to panic though as by and large, the U.S. economy bounces back from these rough spots with little evidence of their existence. A very similar situation took place in the 1990s whereby the housing market caused initial problems followed by the collapse of the savings and loan industry. Using this slump as an example, we learn that quick action from the government nipped the problem in the proverbial bud. The same is expected to happen now.

As far as investment advice is concerned, the best suggestion for current share holders is to hang onto your stock and wait out the slump. Things will eventually stabilize (they always do) and the only surefire way to avoid severe stock investment loss is to hold your ground until the storm passes. A more secure (albeit long-term) investment of late would have to be the bond market, which has been showing the opposite effect of the stock scenario.