Like most people I’ve had a lot on my mind lately with everything that’s going on and I decided to write some of it down if for no other reason to capture the moment for me personally. To that end welcome any/all comments…
Chart from bloomberg.com
The economy is sinking, the housing market is a wreck and it seems the last shoe to drop could be employment opportunities. I, like I’m sure most if not all, people with a 401k or other stock based investment vehicle kept an eye on the market much of the day today and was relieved at the outset that it wasn’t another hugely off day. That was until about 12:30pm PST and I saw that we were in free fall once again ending with a DJIA of 8579. Personally, I don’t think we’re at the bottom and in fact, I expect things to get worse for awhile. I remarked to my wife this evening that I don’t think our home value will return to what it was when we bought in 1999 but we’ve lost +$160,000 from the highs of a few years ago and I can’t say I foresaw that happening thought I’m not shocked. I feel somewhat confident we won’t return to our purchase price but take no solace in the fact we’ve lost what amounts to the purchase price of a new home many parts of the country. Currently, we’re still up over 50% however, I have no faith that we won’t drop below that mark in the coming 12-18 months.
Personally, I’ve been struggling with just what to with our investments and haven’t made any moves other than to halt some of my automatic investing. Of course, the trick is to know when to turn it back on. The difficult thing is that there are so many balls in play at present it’s hard to know where to focus. I’ve been spending a lot of time reading opinions from all sides trying to understand how I can best navigate my family’s finances as things worsen. In the mean time, we’ve been closely examining our expenses and looking for ways to reduce even those things that seem essential. Looks like the holiday season will be rather mild.
I started this post mentioning the job market and I think that’s the next thing that’s apt to take a beating. We’ve already see that start with layoffs at HP and eBay and I suspect large RIF’s to continue over the coming months. I’ve been reading that some people expect that the mortgage crisis isn’t really over yet as there are still 2-3 year mortgages that will balloon in Q1 of ’09. I’m infinitely frustrated by the huge numbers of people who accepted completely unrealistic terms and landed themselves in a home that they never could have afforded. I’m a little surprised there haven’t been more articles like this one, critical of Alan Greenspan’s role in perhaps setting up the current economic climate focusing on derivatives. I think combined with what became the addictively low mortgage interest rates spurned on by his historic rate cuts allowed these derivative driven institutions to lure a seemingly uneducated resource, the American home buyer into today’s morass.
As I sit here listening to Bloomberg radio tomorrow is primed to continue the trend and round out Wall Street’s worse week ever as US futures are down as world markets struggle with the day’s toll. Bush is to speak at 7:45am and I can’t imagine there is anything he can say at this point that’s likely to calm the market.