I Want You … for the U.S. Economy

July 23, 2008 Updated: July 24, 2008

Financial Musings

 

I need you—not for the army, not for the coast guard, and not even your time and physical attendance is required. I need you to join the round of financial fiesta we are having. Let’s be frank: there isn’t anything to get excited about in the financial markets in recent weeks, unless you had the necessary foresight over the banking industry and sold whatever you held before things came tumbling down.

So then why do I need you to put your hard-earned life savings and put them in the market?

The good news is that the Federal Reserve announced a plan to bail out unlucky fellows of Fannie Mae and Freddie Mac. This is much comforting on appearance, knowing the long assumption of government guarantee over these two was not complete bogus. Order will be maintained and things will go on as before, we would hope. To those who are not watching closely they can assume this is about as bad as it could get, and we are at the bottom of the roller coaster. For those who held the good old U.S. treasury bonds, it seems that the chance of default remains as remote as the possibility of George W. Bush re-elected to a third term. Now all we have is good news about the future—why worry about problem already incurred? Look ahead, my fellow optimistic Americans.

Now the above would “suggest” to you that this might the one precious moment in history to seize the famous fable of “buying at the bottom,” despite the fact that we’ve heard the same saying every month as the market continued its meltdown. Who cares about suggestions and wild guesses? We get that from the media all day. What we truly need are facts, facts, and more facts, along with some rationale; and feel free to sprinkle on some courage too.

What is needed to keep the Wall Street roulette spinning? Suddenly the realization of the fact that the government has conveniently placed the bets on your behalf strikes you. It is like going to war, whether you like it or not, we are in it, and you are contributing to it. In this case, like the saying of “nothing hurts more than a half-hearted tackle” on a football field, you might as well believe that, with your contribution, everything will come out all right.

Now the fun begins, as nothing shakes the market more than a change of overall expectations. Expectations are the truths and the only truths when judging market fundamentals. If you put your money in, it simply means you believe you will win.

Now this is the best part, if you believe the market is going to make a come back like superhero movies on the box-office. In addition your neighbor believes in it, your parents, children, co-workers, lawyers, doctors and everybody else around you all believes in it, then reality is created.

So if you want all this mess in the market to go away, you know what to do, right?

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