Stock Market Information

Just about every consumer is probably aware of the chaos taking place in the markets in recent weeks. After all, the news is everywhere, from newspapers to media sites. In addition, if you have a 401k or IRA account, you’ve noticed the precipitous decline in the stock market. For all of the pain we’ve seen so far, however, life has remain largely as it was. Unemployment is higher but not catastrophically so, the majority of people still go to work, still collect their paycheck, still pay their mortgage. It’s too early to say we’re en route to the great depression 2.0, but the real fear of that possibility is here.  The government, for it’s part, has unveiled an aggressive, greatly ambitious plan to bail out those suffering financial institutions. But as a recent article at Yahoo! Finance explains, not everyone is happy about the bailout .

Of course the government needs to step in, but how? The markets have collapsed so rapidly that the Fed and government officials were caught flatfooted. A knee-jerk reaction of this magnitude could lead to problems further down the road. A blank check to the financial sector may not be the best solution when taking into account these are the same people that caused the crisis in the first place.

Some consumer advocate groups are stressing a need for transparency. There’s a number of factors at play, namely where the money is going, how it’s spent, and whether it will be put forth for executive compensation when they obviously did an awful job of managing their respective firms. Do they really deserve a golden parachute for doing an unethical and questionably illegal job? Average taxpayers need to see the meat and the bones of the plan presented in simplified terms, Details, I hope, are still to come.

When the Oracle of Omaha speaks, the world listens. Warren Buffett is unquestionably one of the best investors who have ever lived, and he recently put his money where his mouth is. His company, Berkshire Hathaway, recently invested $5 billion dollars USD into the Goldman Sachs Group inc. which is a huge vote of confidence at a time when most consumers fear the U.S. banking system is on the verge of collapse.

The markets have reacted much like they have to other news, flat. No one really knows if this is the shot in the arm that the market needs or whether it shows just how close Goldman was to the brink. Certainly Goldman’s stock has reacted favorably to the news, and it’s up about $10.00 so far. Buffett himself said that he thought Goldman was an “exceptional institution.” Buffett made a big move just like this one back in the late 1980s, when Berkshire Hathaway invested into Salomon Brothers Inc. He led Salomon after the firm admitted wrong doing involving U.S. Treasury Bonds in 1991. Salomon was later sold into what’s now Citigroup.

Both Goldman Sachs and Morgan Stanley have worked with the Federal Reserve to change their status from investment banks to commercial banks. The status change gives them more access to borrow federal money and more ability to build a stable base of deposits. That also means that their upside is limited since they’re subject to further regulation. Most see the move as a stabilizing signal to the market and a feeling that perhaps the worst is almost over. Unfortunately it’s still impossible to tell for sure.

There’s a good reason that many professionals tout the benefits of buy and hold investing, for one thing, it’s one of the cheapest ways to invest. Trading often means shelling out a lot in taxes and fees from your brokerage of choice. If you’re looking to keep your overhead costs to invest low, listed below are some great ways to get started and keeping your returns for, well, you!

• Get Rid of Loads: Loads are defined as upfront commissions that are paid to the brokers who sell mutual funds. They can be fairly small, 1-3%, all the way up to 8.5% of your initial investment. The problem with sales loads is that they immediately bring down your investment returns. The commissions are paid to the salesperson, not the fund manager, so the manager doesn’t work any harder than those of a no-load fund. Load funds as a whole do worse than their no load counterparts. Loads also tend to skew the integrity of your broker’s advice. Many times brokers who work for a commission are interested in selling you an investment product that benefits them, not you.
• Watch Operating Expenses: All mutual funds have ongoing fees. They pay the operational cost of running the fund, from marketing to customer service lines to the prospectuses that come in the mail. Obviously the fund company’s profits are tacked onto this as well. If you’re looking for the fund’s operating expenses, just pop open the fund’s prospectus. It’ll typically b e listed under “Total Operating Expenses” or you can always call a customer service line for the fund.