Economic Recovery and Stock Market Uptrend In The Horizon? The Roundup

by Silicon Valley Blogger on March 25, 2009

The stock market looks like it’s recovering a little, probably in response to a spate of relatively “better” news about the financial world and the economy. Here’s what I’m seeing as possible reasons that people are once more jumping back into the stock market fray:

  • President Obama is cheerleading his way through the crisis. It helps that he’s a charismatic speaker, almost evangelical in a public forum.
  • Economists are saying we’re going to have a recovery in 2010. The rest of this year will be difficult but by next year, the economy will see some growth (expected quarterly increase of 2.7%) and by 2011, the GDP should grow even further (4.1%).
  • AIG executives, the unfortunate (though deserving) scapegoat for corporate greed, have been returning some of the tax money they were paid through their “employee retention bonus program“.

So with this brief break from negativity, do you buy into better times ahead? Unfortunately, my spouse doesn’t. He’s jaded and cynical about the economy and remains as glum about it as ever. I’m much more sanguine about things though, so as we decide on what to do about our finances going forward, we’re compromising on a few strategies as follows:

  • We’re dollar cost averaging to rebalance. That is, we’re tip-toeing into the stock market to get us back to a 60%/40% set up in favor of stocks.
  • We’re buying TIPs. The spouse believes in the “terrible inflation ahead” scenario. So we’re going to hedge.
  • No REITs for a while. Not sure if we’re ready to be real estate investors right now. Maybe it’s paranoia, but how do we know that the real estate investments churned out by Wall Street won’t contain hidden toxic assets?

So do you buy into the economic recovery slated for next year? I’d really love to see things start picking up. Also, because the stock market usually recovers before the economy does, I wonder if the signs of life we’re currently seeing in the markets are for real and not just a false start.

Around The PF Blogosphere

I had some fun chatting with some pf bloggers while we listened to a new blog radio show that stars J.D. from Get Rich Slowly and Jim from Bargaineering.com. Check out the Personal Finance Hour if you want to hang around the virtual water cooler (chat room) with a bunch of pf bloggers and listeners, as we listen to Jim and J.D. banter about finance. Financial Nut can tell you more about what went on during the premiere showing.

Also, a few days ago, I got to meet a fellow pf blogger from the East Coast: Mapgirl from Mapgirl’s Fiscal Challenge, who was visiting my neighborhood for a few days. We had a nice lunch together at the California Pizza Kitchen and shared some blogging secrets. ;) I really enjoyed this nice opportunity to just kick back and get to know others in the ’sphere. Plus it’s always fun to put a lovely face to a blog. Hope to see you again soon Mapgirl!

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{ 8 comments… read them below or add one }

1 Kristy @ Master Your Card March 25, 2009 at 11:21 pm

Thanks for the mention! Great group of articles this week, too!

2 The Financial Blogger March 26, 2009 at 2:37 am

Hey !
thx for the mention :-D

3 Funny Quotes March 26, 2009 at 6:45 am

I really hope the economy does start recovering in 2010 if not this year. It’s been a tough time for many, so a recovery would be good. I do think it helps that Obama is a cheerful person. He seems to give hope to people even in tough times like this which is good.

4 John @ Curious Cat Investing Blog March 26, 2009 at 7:14 am

I am hopefully we can recover later this year, but skeptical. The huge debt burdens from the last few decades (federal government and consumer) are not addressed in any way currently. The focus is on getting consumers spending – which is a problem when they have been overspending for decades. And the other focus is on increased government spending which is likely to lead to inflation. However, even given that, the economy still have many things goving for it and my belief, and hope, is that those problems just reduce the potential but do not condemn us to a period or stagflation or a “lost decade” like Japan experienced. The biggest worry I have, however, is the huge reliance on government and consumer debt is leaving us little room to absorb problems and still prosper.

5 TaxRascal March 26, 2009 at 9:10 am

Looks like we’re getting a recovery in the sense that stock prices are up, but not in the sense that any value has been restored: the ‘good news’ is generally a new subsidy, which we’re all going to pay for eventually.

So you may both be right! In the next year, stocks may end up being worth more and more of dollars that are worth less and less.

6 jim March 26, 2009 at 1:47 pm

Thanks for mentioning the show!

7 Manshu March 26, 2009 at 2:06 pm

I was buying so far and hope to continue buying well into 2010. So I hope stock prices don’t rise too much for that time.

And thanks for the mention SVB.

8 mapgirl April 2, 2009 at 8:36 pm

Thanks for meeting me for lunch! I had a great time finally meeting you! :-)

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