By: Investor Solutions, Inc.
The Global Markets have been bouncing around over the last several months causing a lot of uncertainty. Oil is at an all time high ($129 a barrel), the real estate market in many parts of the country (most notably Miami, Las Vegas, and Phoenix) is in complete disarray, and now there is a credit crunch due to the housing market. Historically, the economy has been through a lot of tough events that have brought on uncertainty in the markets yet it has persevered time and time again. Unfortunately, there is no guarantee how the economy or markets will behave going forward; however, we are confident that it will work its way through and overcome the current uncertainties once again.
On May 31st 2007, the Dow Jones was creeping its way up the economic ladder closing at 13,627 on its way to 14,000 with no end in sight. People were happy sitting back in their new houses looking at their financial statements and counting their money. Fast forward almost exactly one year later to the end of May 2008. The Dow Jones is hovering around 13,000, there is much speculation on the overall economy, people are walking away from houses due to unpaid mortgages and no one wants to look at a financial statement.Gasoline has gone from bad to worse topping the $4.00 a gallon mark this month. It was just at $2.00 a gallon back in May of 2004, $3.00 a gallon in September of 2005 and then again in early 2006. We are all wondering if we will be paying $5.00 at the pump by yearend.
The big “R” word (Recession) has been brought up, tossed around, put through the wringer and spit back out more times than I can remember this past year. Sometimes it is confusing to know if we are at the beginning, the middle, or near the end of a recession. Technically, by definition, we are still not in a recession and may not even enter one. It’s amazing how much the consumer’s confidence can change in the span of a year.
In a world that at times feels like it is spinning out of control we should focus on the things that we can control. Eat in instead of going out. Rent movies instead of going to the movies. Cut all unnecessary cable channels. Spend more time with friends and family. Drive less and exercise more. Pack your lunch. Pay off your credit card debt. Spend less and invest more. Make your own coffee. Much like all of the other times in the history of market uncertainty, this may end up being one of the best opportunities to save and invest, instead of spend. Take advantage of it.