I have a confession to make. I trade stocks in my spare time and over the years I have been very profitable. That is until the past few weeks when the credit crunch has come to bite. We have been discussing this bailout with my friends over the weekend and you can imagine the views are as different as they can be. Some hate it, some love it , others hate it but think there is no choice. It doesn’t matter what you think about it. It did not happen. What matters is what to expect over the coming year in your finances.
I can safely say that I have no idea how bad the economy is. I know it’s getting harder to save a dollar but that is as far as my financial analysis goes. The guys in wall street are screaming bloody murder but those guys will say anything to make you buy more stocks. The problem with this whole bailout issue is perception. This is not another blog about thinking positively then you will be rich. It’s just that when people start thinking the economy is bad, that tends to happen.
When people think the economy is doing poorly, they tend to spend less which means less goods and services sold which leads to less job creation. It becomes worse when people start losing jobs due to poor orders in their companies. A country like Ireland has already started to suffer this. For whatever reason, the Dow fell 777 points yesterday. 777 points is not a joke as billions of dollars worth of shareholder value was destroyed in a few hours.
The stock market falling was the immediate repercussion. The problem will come later if banks stop or fear lending to each other. If there is less credit, then there is less money for businesses to expand leading to less job creation. This is a bad thing that happened. The financial markets tanking is not a bad thing. After all sometimes stock values have got to correct themselves. The problem is the idea that the global economy is going to crash. That is where the danger lies.
I am still going to take a look at the stocks this week before I make an investment decisions, but rest assured that there are those who have already made their decision and are selling big time. All I can do, is sit next to my TV and watch the opening bell in the next 30 minutes.
Let us hope that what happened in the Asian market stops today and we can get a bit of sanity before we get scared by these damn politicians.
[...] to keep my mind off the financial bailout, my wife got me started on a web hosting service that we used to use. It was terrible and sometimes [...]