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Ben Stein's Money: Don't Panic

Posted by billspaced | 10:39 AM | | 0 comments »

Ben Stein over at yahoo! Finance has a great general interest story on what do when all the financial markets are falling all around you (like now!). He suggests not to panic.

This is good advice. In general, the #1 financial rule of all time, to consider always, is to "buy low and sell high." There may never be a better time than now. The housing market is crap, the stock market is volatile, oil is going through the roof (is it at its high?), futures and options are just way too risky for most of us to handle.

So, with real estate valuations continuing the downward slide and stocks languishing for some time now (the financial stocks, which are getting killed right now, will continue their slide -- all the bad news is not in yet) and this slide will drag the general market down with it. EVERYTHING depends on a liquid, free-flowing credit market. Most businesses expand using credit rather than equity, and a tight credit market (and it's only going to get worse) makes doing so very difficult. Only the strongest companies will be able to get the funding they need to expand, and many will forgo expansion and just wait it out. They may even "trim the fat" now in order to prepare for the future when the economy rebounds.

But don't forget that we haven't even officially had a recession yet (the proclamation that we're in a recession always occurs months after we enter one), so there's a good year or year and a half before we start our upward trend again.

Also, too, don't forget (how could you?) that we're in an election cycle, and recessions generally follow them. So, look for a rebound in mid 2009 or later.

But NOW is the time, if you've got the cash, to be picking up beaten-down financials and real estate.

Ben Stein: Don't Buy the Panic

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