I’m getting pretty sick of watching my retirement nest egg dwindle away, so I called my financial advisor yesterday and hinted I might like to dump my mutual funds. They are eroding my portfolio like the Mighty Mississippi is gobbling up Louisiana.
While investors weighed the likely impact of the Obama administration’s massive $790 billion economic stimulus bill and considered how Secretary of the Treasury Timothy Geithner’s Financial Stability Trust might restore order to the nation’s financial sector, the economy as a whole continued to churn, sending the Dow Jones under the 8,000 mark!
Yikes. I can’t look at the news any longer. Too depressing.
Raymond James’ Chief Economist Scott Brown suggests that the uncertain investors tend to rush from “one side of the boat to the other,” depending on the perceptions of the hour. In the process, he said the positive aspects of the government’s action can be overlooked or dismissed without due consideration. (I guess that means I’m on the wrong side of the boat.)
Geithner’s framework does promise more financial institution accountability than was applied in the original TARP (Troubled Asset Relief Program) legislation in October. Well, it’s about time! I can still see all those fat cat bankers partying down at the Super Bowl on our dimes while we were sitting at home eating black eyed pea caviar and popcorn.
Nevertheless, the savviest analysts caution that even if all these measures live up to their promise, there is no overnight miracle in store. Even investing in state and federal “shovel-ready” infrastructure projects – to boost employment and inject demand into the economy – isn’t an overnight cure. Brown suggests results are not likely to be visible until the second half of this year, or even into the first half of 2010. Notice how they keep moving the finish line?
Historically, markets have emerged from recessions with strong gains, leaving aside those who left their assets in safe but low-reward savings or fixed income investments. That may be true, but the current situation blind-sided us all and is breaking all the rules. What if the stimulous package doesn’t work? Could the Dow dip back down to the 5,000 range? I cringe at the thought of what that would do to mutual funds.
I’m meeting with my financial advisor today. I’m going to suggest taking those mutual funds – what little is left – and putting it into a reward checking account that is paying 4 percent on deposits up to $50,000. I should have done it two month ago. Many commercial banks are offering these perks and I think they are great so long as you can exercise a little self control and not let a big checking account balance entice you to buy _____________ (you fill in the blank).
There are some stipulations on these “rewards accounts.” At my bank you must have at least 10 withdrawals – either automatic payments or ATM transactions. But that nice little interest deposit at the end of the month is well worth it.
I’d like to know what you are doing with your investments. Casino, anyone?