Tuesday, January 08, 2008
When the stock market rides like a water slide



Ali Velshi


360 Correspondent








So much for a happy New Year - we've only had 5 trading sessions this year and major markets have done nothing but dive.

Today was supposed to be a quiet day on Wall Street - we were going to let the candidates own the news today. In the end, the Dow dropped about 240 points; NASDAQ and S&P 500 dropped as well.



And another guy says we're going to have a recession. And he's not just ANY guy - he's a Harvard economist who happens to head up the National Bureau of Economic Research.

The NBER is the group charged with telling when we're in a recession. So the guy who's going to tell us when we're in one, says we're headed for one. Merrill Lynch says we're already in one, which puts them in agreement with about 60% of you, according to the most recent CNN/Opinion Research Corporation poll.

I could go on, but I don't want to depress you. Needless to say you already know the strains you're under: high gas prices, low home prices, maybe interest rates that are higher than you'd like.

Good news?

The Fed may cut rates again at the end of the month, and the Federal Government may consider cutting taxes. But both of those acts carry risks - which is why I say that they "may."

Experts tell me consumer staples, alternative energy and companies that cater to consumers in other countries are the places to park your money.

In a recession, invest in the things that are likely to do well. But stay diversified - don't put all of your eggs in one basket, no matter how good the basket looks.
Posted By CNN: 4:35 PM ET
  5 Comments
Ali

I sure hate to admit it, but I know absolutely nothing about the stock market or anything considered "high finance".

I do know enough to know if my stock is going up or down but even that took a while. The first time my stock split I almost cried. Then someone explained it and I felt pretty good.

Right now I'm up to my neck in this political stuff (I know there's some kind of tie in)and when I learn everything I there is to know about it, I might give it another try. That could be a long time coming however.

For now I'll just keep watching CNN Money and try to grasp somrthing!

Thanks,
Maggie
Posted By Anonymous Anonymous : 4:56 PM ET
Ali,
So you are telling me that the NBER say that we are headed towards a recession ! It seems as if we are in a one already! Then if that's so heaven help us! I can't imagine things getting worse! I can't see the government doing anything to help much!

Cynthia, Covington, Ga.
Posted By Blogger Cindy : 4:59 PM ET
I'm not too worried. I'm in it for the long haul! Patience is a virtue...
Posted By Anonymous Jess, Paris, KY : 5:01 PM ET
Ali/AC360:
Where does unemployment fit into the picture?

Both my husband and I have recently been laid off. It isn't just the blue collar employees anymore. We both have college degrees.

Fortunately, we sold our house before the bust and are renting so we don't have to pay property taxes right now.

I agree with Merrill Lynch. We are in a recession. It is just no one wants to say it.

Thanks for the advice on investments, Ali. We are in no position to risk anything at this point.
Posted By Blogger Sharon from Indy : 5:21 PM ET
I've been watching in horror as stocks have started to nose-dive... It's somewhat worrysome. I'm dreading further gas price inflation and the housing market is just sad. What's next, I wonder?!

I may send a nice letter to the Fed if they DO cut tax rates, but I'm thinking they won't--risks always outweigh the benefits in this sort of situation.

Well, let's brace ourselves!
Posted By Anonymous Christianna : 6:02 PM ET
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