March 31, 2009
Yesterday President Obama announced the (forced) resignation of GM’s long-tenured CEO and Chairman, Rick Wagoner along, with a demand that the company take stronger action in restructuring in the next 60 days or face bankruptcy. At the same time he guaranteed both GM and Chrysler’s warranty programs and provided interim funding to keep both companies going, albeit on different paths as he announced the arranged marriage for Chrysler with Fiat in the next 30 days. This is huge news in economics, investments, politics, and nearly any other arena. Rush Limbaugh weighed in with the retail store policy, “if you break it you bought it.” President Obama just took away GM’s leadership and then said “you have to do better, and quickly.” If the President is promising sweeping changes in taxes, regulation, and health care to go along with taking control of businesses that are too large to fail, how does anyone plan for and invest in the future without knowing what the ground rules are going to be? The markets reacted strongly to yesterday’s announcements, broadly losing over 3%.
March 24, 2009
My employer sponsors a 401k plan with investment options in company stock or selected mutual funds. There are good reasons to not put all of your retirement investments in company stock, but the mutual funds offered in the traditional plan may not cover all the investment vehicles you want to use. Please be aware that this traditional “Prototype” fund may not be your only choice.
For example, Fidelity’s “Non-Prototype” BrokerageLink™ program allows investments in stocks, bonds, exchange traded funds (ETFs), and more, depending on your experience and expertise.
March 17, 2009
As a result of my age, I first became aware of government influences on the market in the 1970’s when we had inflation accompanied by stagnant economic growth, termed “stagflation.” Three administrations (Nixon, Ford, Carter) tried various solutions with poor results until Reagan simultaneously applied the brakes to inflation (tight money policy) and the gas to the economy (low taxes). Our current economic climate seems precarious and the government is striving mightily to influence it for good. We have interest rates pushed down by liquidity and money forcefully flowing into the system. The government is putting capital into failing businesses and trying to protect home owners. They are more worried about stopping freefall and preventing deflation and no longer worried about inflation.
