Market Update: 2.16.09

    At long last, March turned out to be the best month for stocks in over 75 years. The markets appear to have gotten over the idea that the financial system might be on the brink of collapse after several of the largest banks in the nation reported being profitable in January and February on an operating basis (in other words, not including writeoffs of bad loans). That touched off a four-week rally in world stock markets, which rose as much as 25% by early April.

    As I reported beginning back in January, recent economic reports have shown that the severe deceleration in the economy, which really took off in the fourth quarter, has moderated quite a bit. We have seen improvements in housing, retail sales, industrial production, and even consumer confidence. These reports show an economy that is still contracting, but the rate of contraction, rather than getting worse as previously feared by economists, is slowing down markedly. If these trends continue, we could see the bottom of the recession sometime in the next few months, if not sooner. Then we should see the economy start to actually expand and recover.

    This month, in addition to the regular spate of economic reports, we will also see the first quarter’s corporate earnings reports. These are widely expected to be pretty bad, and if they come out as expected or a little better, that could be a positive for the stock markets. If they come in worse than expected, it could be bad for stocks in the short term.

    But after such a huge and powerful run-up in stock prices, it would not be surprising to see them drop some this month. Whether stocks will drop back to or below the March 9th lows around 6600 on the Dow is anyone’s guess. I sure hope not, but it’s impossible to predict the short-term gyrations of stock markets. No matter what happens this month, it is becoming almost certain that we are not descending into another Great Depression, and that the outlook is becoming much more positive overall for an eventual recovery as the year wears on.

    Remember that stocks usually recover six to nine months before the overall economy does, and thus the rally we have seen over the last four weeks could be the beginning of that recovery. We won’t know for sure until much later, at which time we’ll all probably look back and wonder why we couldn’t see it now.

    Regardless of what happens in the short term, we know for sure that happiness and fulfillment are not directly related to the size of your wallet; they’re about the size of your life.

    No doubt, there are people in this world who, like the followers of stoic philosophy during the Roman Empire, could have their estates confiscated and wander the world for the rest of their lives penniless, and continue to influence their culture by their philosophical contemplations, and by their talent for enjoying the beauty and pleasures that are everywhere around us every minute of every day–living without remorse, regret or envy, refusing to permit the shadow of their former wealth to darken their outlook.

    Most of us are not quite that strong. Most of us need to remind ourselves to look outside the investment pundits on TV for comfort, at the wonderful things that are available to us not through our portfolios, but through our wits and imagination.

    With this in mind, we are asking all our clients to help us come up with a list of things we can all do to give ourselves joy and make our lives more interesting–things that don’t cost a lot but pack a powerful wallop in creating meaning and value in our lives.

    Here are some ideas to get the process started. Give us a call or email us your ideas and we will publish them for everyone to read.

    • Start a gratitude journal; every morning/evening, write down 5 things for which you are grateful.
    • Write a poem.
    • Read those books you’ve been collecting, meanwhile drinking all that tea that has accumulated in your cupboard.
    • Make a game out of cooking dinner for a week using only ingredients already found in your pantry or freezer (adding fresh vegetables).
    • Write a letter to a soldier.
    • Have a book swap party, with everyone bringing a few books they’d like to swap, as well as a refreshment.
    • Teach a teenager to balance a checkbook.
    • Take an elderly neighbor to lunch.
    • Play cards or a board game with someone fun. (Host a Board Game Night for friends, family or neighbors.)
    • Make a hobby out of finding free weekend activities and planning outings with family friends.
    • Volunteer at an animal shelter.
    • Plant some flowers or vegetables from seed.

    See, it’s easy and can make a big difference! Be sure to let us know your ideas and suggestions, and we’ll pass them along to everyone.

     

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