Personal Finances: Be Very Cautious & Circumspect

As stories appear and then disappear regarding the current economic turmoil, it is extremely difficult to find reliable information that is not either too upbeat or too negative.  If one were to gather the top 100 economists in a room and asked them to give their thoughts on what is coming the rest of this year; one would get 100 different opinions.  There is precious little consensus concerning what is happening let alone what is going to happen.

Rarely is there any noteworthy financial news during the short week leading up to Easter.  Not this year.  Starting with the unprecedented Sunday evening announcement of JP Morgan Chase purchasing Bear Stearns to the Fed making a major announcement concerning rate cuts on a Sunday night, to the extreme market fluctuations during the four days of trading; it was quite a week.

Now the real work begins as the rush of reports detailing just how good or bad the economy is doing start coming out.  With each report the markets will ride the roller coaster of emotion and will probably show more of the wild swings seen last week.  There is no possible way anyone can put their finger on the pulse of the United States economy just yet.  Thus, is bound to be the incredible extremes of ordering CPR for the dying economy vs. trying to lift the resuscitated economy to its feet.

Many of the moves made by the Federal Reserve Board recently are bold if nothing else.   There is no way to gauge if they were the correct moves until more time goes by.  This is not what nervous investors want to hear.  They do not want to wait any longer to find out if they need to cut back or spend more; invest or divest, push the panic button or wait.  Nervous people are not good at manifesting patience.

An article appeared this evening on Yahoo news from two Associated Press writers that is probably the best and unbiased report I have seen in awhile concerning the mess we are in financially.  With great appreciation for their excellent work I refer you to this article:


As the long weeks unfold before the next major holiday at the end of May, this country will go through the depths of dismay and the heights of joy as major moves in the market seem to indicate one thing only to be replaced the next day by the opposite.  This manic/depressive behavior is not good for anyone.  It breeds a general feeling of uneasiness at the least and bitter anger at its worst.  Beneath it all is the gnawing doubt that seems to grow stronger every day that maybe this mess is REALLY as bad as some say it is.

This mess is far bigger than you or me.  We did not cause it and we cannot solve it.  All any of us can do is pray, prepare and be wise stewards of what we have.  Now is not the time to frivolous or stupid with assets.  Now is the time to be extremely careful with both spending as well as investing.  Now is the time to seek shelter in that which is safe and not that which is speculative.  Now is the time to stall any major decisions dealing with finances until the dust settles.

Depending upon how events pan out the next two months, everyone should be fairly clear on their personal course of action by Memorial Day.  The problem is the two months between now and then.  Unless you are a thrill seeker, I would assume the next two months should be spent as an observer more than an active player.  I would think that wisdom dictates stepping back and taking a wait and see attitude toward most financial matters.


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