I suppose that someone could take a crack at trying to explain the relationship between the economy and the movements of the financial markets. But it isn't me.

I used to believe that if a company makes good products, has good management and is profitable, that the value of their stock should increase. I suppose that over the very long term that would be true. At least that's what Benjamin Graham said in his classic 1951 book, Security Analysis.

But these days the price of individual companies and the overall market moves in inexplicable ways. There are all kinds of reasons--market segment changes, performance versus expectations, rumors, bad non-financial news, surprises, and so on and so on.

Having said that, I am of the firm belief that no company, industry or market will consistently perform differently than the direction of its underlying economy. If the economy of the countries in which the companies or markets "live" is weakening, over time the value of investments in those companies or markets will also decline. As evidence of that, I would wager that not one single equities analyst or portfolio strategist is currently issuing opinions saying that investments in U.S. companies, industries or markets appear to offer good opportunities at the current time. One can argue that such opinions are short-term in perspective, but I don't know of anyone who is suggesting that the U.S. is presently a great opportunity for investment..

In my opinion and using the lexicon of Wall Street, now seems to be the time to underweight stocks and overweight high quality fixed income securities and cash.

Thanks for at least trying to explain to a thickhead some dumb items. I still do not understand the threads on how folks are losing so much money and that is not meant to be insensitive at all.....I suppose it depends on where you invest !!!

As I said I am UP but do not have much at all and maybe in this case that is a good thing

I'm surprised that no one has blamed "The Developer" for this mess and asked the POA to investigate.

Kahuna, thank you for taking the time to post an intelligent, articulate response to the questions. Your professional expertise comes through as it has in your posts in other forums. I have a better understanding of the consequences of the meltdown and a clearer vision of the type of remedies that are going to be needed. I know there is an infinite number of factors that I will probably never understand, but you have certainly provided a base to build on. Thanks.

I admit I was a Hillary supporter and now am an Obama supporter, but this goes way beyond party affilliation. I never pledged allegiance to the Democratic Party or the Republican Party, but the United State of America. I agree with many, the two parties are causing way too much polarization among Americans. It has become a win at all costs, and those costs are dragging us down. I have read we owe China and Japan a trillion dollars for loans. Are we going to print more money to pay them after we get done with this bailout? We need some really smart people sent to Washington (think tanks) to figure out how to get us out of this mess and party affiliation be damned. If Congress and the President (whoever that is) can't get us on the road to recovery and solvent, vote someone in that will.
Also, I do a lot of mediations and find when people are face to face rather than on the phone or emails, they are much more civil to each other. My resolution from now forward is to not throw any stones, tomatoes, and past indescretions of our representatives at each other (Heaven knows there is enough of that on both sides of the aisle) for anyone else's opinion, or in lieu of having one myself. As much as I disagree with Cabo on issues, he is always a gentleman in his writings. I would also like to point out Kahuana for the same. There are many others that disagree with posts that I can't think of to mention, but take the high road. Thanks.

I'm just trying to stick to the thread subject in the opening post

Actually the question can not be answered until a invoice bill is submitted and that will take many years. In the meantime the economy progresses with money to be made or lost by us collectively. So at any given time 2 years, 5 years, 25 years there will be an accounting on the balance sheet that shows where we are either plus or minus.

To not risk this investment bail out will likely bankrupt many of us individually (yes you and me) today. So we are simply transferring this risk (profit vs loss) to later generations for good or bad.

http://abcnews.go.com/politics/5050/story?id=5840510
Thank goodness I have
no 401k
no credit card debt
no mortgage
Yet I hear this could cost each and every American $35,000!
Doesn't seem quite right!

Originally Posted by Rokinronda

http://abcnews.go.com/politics/5050/story?id=5840510
Thank goodness I have
no 401k
no credit card debt
no mortgage
Yet I hear this could cost each and every American $35,000!
Doesn't seem quite right!

The previous post said it correctly - there is no invoice yet and whether there will or won't be is a matter of time.

To me, this bailout is no different that rebuilding a city which was sited 4 feet below sea level and people did not bother to buy flood insurance, or providing bailout loans for cities that overspend. In the near future we will probably see states like Maryland (no Bluer a state there is...) - which has overcommitted big time at the state and county level - come with hat-in-hand seeking bailouts for poor business practices because there is no other choice other than to effectively raise taxes 50% across the board.

Stuff happens, and nobody has a crystal ball to forecast the future to a no-risk image. I'm just glad that THIS TIME there was some recognition of a serious problem and action taken to thwart it. The last big time there was such a crisis (1929) it came, then impacted, and the solution was too late to implement.

Politicians everywhere are trying to make political capital out of this through the blame game. The fact is we all are to blame or none of us are, as everyone wanted a little more out of the pot than was possible, and this time it went tilt, but did not shut down. We've learned a little more, and won't be so blind (hopefully) in the future. But life IS a learning process, not a guarantee, and we haven't seen it all or know it all yet. The real thing is, did we learn enough not to make the same mistake a second time?