The Eye of the Storm

The eye of a storm is the middle of the storm. It is believed to be the calmest part of the storm. As a youngster I remember a hurricane hitting the city I lived in. The beginning of the storm brought a lot of rain, hail and high wind. This part of the storm continued for about three to four hours. At some point, the sun came out and the rain and wind ceased. This was my first introduction to the term, "the eye of the storm."  The weather report on television warned people to stay indoors even if the storm appeared to be over. The report confirmed that the storm would start again at some point within the next three hours.

Financially, we have witnessed part one of the storm. This consisted of the government take over of Fannie and Freddie, the Wall Street bailout, the departure of Arthur Anderson, Washington Mutual and other various companies. In addition, the first half of the storm was accented by sub prime home lending, stimulus packages, rising rates of unemployment and corporate scandals at giant corporations such as Enron and WorldCom.

Currently we are in the “eye of the storm”. Things appear to be "stabilizing" in this supposed "recovery." However, in actuality we are not recovering. We are in the “eye of the storm". Wall Street gurus and DC politicians are attempting to comfort the public by using this “recovery language”. Do not be deceived, we are simply in the “eye of the storm”. What should you do in the eye of the storm? You simply realign or establish your financial goals, seek and execute investment opportunities and read to be as financial literate as you can and then gear up for part two of the storm.

What can we anticipate for part two of the storm? That is a good and scary question at the same time. It is quite possible that another super power can arise in the second half the storm. It is also possible that we will see many world governments financially fail, people sleeping in tents, an increase in the levels of unemployment, hyper-inflation and the rise of a single world wide bank.

Are Things Really Improving?

If you have been watching the news of late you will realize that many of the Wall Street professionals are “willing” the market upwards. Can it be said that the market is on an upturn simply because a few companies have announced profits during the first two quarters of 2009? Definitely not! There are several factors that alert us things are really not improving: (1) unemployment is still high, (2) house prices are still dropping in many markets and (3) the government is intervening in this “apparent” upswing a bit too much.

At best the upswing is artificial. It’s designed to convince the general public that it is safe to come outside and spend, spend, spend! After your family’s monthly obligations are met do you have excess income? If so it is best to invest in something that will produce income, whether short or long term. Opportunities may include a business venture or some other type of investment.

With Christmas coming, this artificial upswing will seem to be real. The goal here again is to get the public to spend money in order for the economy to turn. Be wise you’re your spending in this upcoming holiday season.