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NEWS - Twitter Report - What’s All the Celebrating About?
December 8, 2009
We had some good economic news Friday – relatively speaking – when it was announced that the jobless rate dropped to 10%, down from 10.2% a month earlier. There are some 15 million Americans looking for work – about twice the population of New York City. The number’s far worse, about 17% if you include those who have stopped looking for work, took early retirement, returned/remained in school or have taken lesser-paying part-time jobs. These are known as the “under-employed.”
Many are buying into the theory that the stock market is a “leading indicator,” meaning this year’s rally is telling us that better times are ahead. I hope they are but can’t be certain. Nevertheless, I am regularly hearing questions such as: “Is this really a bull market?” and “What should I do now?”
While each of us requires an individual response, allow me to say I remain cautious due to a number of factors. Consumer confidence is weak. Unemployment rates are too high to ignore. The housing market is anemic while banks are reluctant to lend despite the Federal Reserve keeping interest rates at or near record lows. The severe lack of credit and consumers’ reduced spending are in sharp contrast to what we’ve seen during the past 20 years when credit was easy to obtain – perhaps too easy in some cases.
There are however, some rays of economic hope on the horizon. The dollar’s devaluation may present a good opportunity to increase foreign exposure. A weak dollar should also be good for the export and tourism sectors and health care should remain strong. Interest rates should remain low for the foreseeable future.
My advice: Stay invested in good, dividend-paying companies but be ready to react quickly to changing conditions.
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