Collapsing Market---What to invest in?

[tombogan03884]

Many stocks are terribly undervalued...if you have cash to put in them.  I hope oil and gas stocks will rise most quickly and that is not advice...as MB said on his podcast that sort of thing is refined bovine scatology.  I might be in denial...but I don't think oil and gas will drop very much more for right now...the price is still high and profits are good.  Just as a sidebar, the oil and gas company I work for cut their budget by 35% for 2009 so our wells drilled will drop from 200-250 to 75-115 or so.  For the last month I've been working on ways to demonstrate employee value to the execs so I don't have to lay off any employees.

What we saw in oil and gas prices was a heck of a lot of speculation (hope the traders got their butts burned) and currency disparity ($1.56 to a Euro...oil trades in $'s...Middle East uses Euros so when $1 bought a 1 Euro they got 1 Euro's worth of goods from Europe...when $1 bought 0.64 Euro's they raised the price to stay whole).  Oil has always traded in $'s on the worldwide market except to Iraq before the war, then Iran some time ago...now I think Chavez and a few others are wanting Euros.  Yeah...Chavez is eating you know what with the drop of Euro value compared to the $.

The price may plummet...but short of an international depression or a recession of epic proportions...maybe not.

Same with the "Housing mess" Speculators have been driving prices to levels that can not be supported by actual value, and now we have to bail them out when a natural market correction adjusts prices to more supportable levels.
The economy is not the problem, the problems are panic and speculators unwillingness to accept the consequences of excessive greed.
At least in '29 the speculators had the decency to leap out windows. Careful examination of history shows that FDR's meddling EXTENDED the Depression which was only ended by German re armament which forced other countries to create jobs in the arms industries.

[PegLeg45]

Same with the "Housing mess" Speculators have been driving prices to levels that can not be supported by actual value, and now we have to bail them out when a natural market correction adjusts prices to more supportable levels.
The economy is not the problem, the problems are panic and speculators unwillingness to accept the consequences of excessive greed.
At least in '29 the speculators had the decency to leap out windows. Careful examination of history shows that FDR's meddling EXTENDED the Depression which was only ended by German re armament which forced other countries to create jobs in the arms industries.

Damn, I find myself agreeing with you a lot today, Tom.....not that that's a bad thing.

The stock market is cyclical in that every so many years it gets 'top heavy', regardless of cause, and has to correct itself. Sometimes it just hits more folks harder than other times. The big thing is avoiding panic. This week so many people sold off stocks out of fear, that it caused even more of a drop in the averages.
We surely need to be worried, but unless you are less than two years away from retirement, or actually own stock in a company that is poised to go belly-up, patience may be the word of the day.
I lost 'value' in some stocks in my 401k, but only if I actually sell now. I'm a long way from retirement so as long as the company I'm invested in don't tank, (and I don't need the cash), sooner or later the market pendulum 'should' swing back up again (I hope).
Heck, if you have the cash on hand, now may be the time for younger folks to buy in to the market (get advice from a market expert first).

[tombogan03884]

People who have metals on hand ( gold or Platinum) can transfer that to selected stocks and real estate in the near future and make a Huge profit over the longer term, just like the people who could buy Bell and Coke stocks during the early 30's.

[jaybet]

Stocks are all well and good....but the panic is causing so many other problems that will just start to multiply over the next year. My day job is with an architecture and engineering firm. I've got a mortgage and a 401 K that is tanking, but I can pay my mortgage so that's good. The problem is, NO ONE his hiring architects or building or anything and the company is really slim on work. If they go down, then all 20 of us go down, and there's 20 more default mortgages and all the rest....20 more people on unemployment, etc.
At that point all this Swap value crap doesn't mean much when half the town is losing their homes.

[tombogan03884]

Stocks are all well and good....but the panic is causing so many other problems that will just start to multiply over the next year. My day job is with an architecture and engineering firm. I've got a mortgage and a 401 K that is tanking, but I can pay my mortgage so that's good. The problem is, NO ONE his hiring architects or building or anything and the company is really slim on work. If they go down, then all 20 of us go down, and there's 20 more default mortgages and all the rest....20 more people on unemployment, etc.
At that point all this Swap value crap doesn't mean much when half the town is losing their homes.

The financial and economic FACTS are not to blame for this, it's caused by people panicking. The market will only go just so far down then it will level off and start back up. The sooner the speculators, bankers, and politicians admit that "sh!t happens" and quit trying to "fix" it this sooner things will level off.

[Sponsor]

[Ocin]

Stocks are all well and good....but the panic is causing so many other problems that will just start to multiply over the next year. My day job is with an architecture and engineering firm. I've got a mortgage and a 401 K that is tanking, but I can pay my mortgage so that's good. The problem is, NO ONE his hiring architects or building or anything and the company is really slim on work. If they go down, then all 20 of us go down, and there's 20 more default mortgages and all the rest....20 more people on unemployment, etc.
At that point all this Swap value crap doesn't mean much when half the town is losing their homes.

There was and still is a lot of talk about the "real" economy, being "ordinary" companies, producing goods and providing services, as if the financial industry being "not" real. Fact is however, both are totally intertwined. The one can not exist without the other.

We have organised our economy in such a fashion that companies need to borrow money in order to do the necessary investments. For the past 12 to 18 months however, it has become increasingly difficult for the financial industry to get the necessary funds to provide for those loans, and in those cases where financial institutions were able to get the funding, they had to pay higher interest rates. This is currently more and more being transferred to the companies who need the loans, meaning that it has become increasingly difficult to get the necessary funds for investments, and where they managed to secure funds, they had to do so at much higher interest rates.

This all means that the entire economy will be hit hard and will continue to get hit hard. As investments drop, jobs will be lost. This will result in loss of consumer spending (slowing down the economy even further) and more defunct loans (increasing the problems in the financial market). Theoretically the economy slowing down should result in lower interest rates, allowing companies to start investing again, but with the current credit crunch, this will not happen any time soon.

All experts say that there will be no depression, but those are mainly the same experts who said that the problems in the sub prime market would not affect the "real" economy. Nobody can say for certain there will be an economic depression, but stating that there WON'T be an economic depression is nothing short of wishful thinking.

Ocin