The Simplified Investor

Last week, things looked bleak for equity investors. As the Dow Jones and S&P 500 slid to historic lows, and the TED spread soared to a historic high (more on that below), it looked to many like the thing to do was pull out of stocks entirely, and enter safer assets like gold, T-bills, and steady bank savings accounts. But on Monday, the market bounced, led by the news that the U.S. government will invest up to $250 billion to shore up the U.S. banking system in a plan similar to measures taken by several European powers, including Germany and the U.K.
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The Dow Jones Industrial Average fell below 8600 today - bleeding another 7% to continue the incredible losses that have take place all week. It seems like the much anticipated bailout has not had the effect that many anticipated - rather than assuading investor concerns that the worst of the financial crisis was over, it was an inadequate leavy in a flood of capital out of the equity markets and into more stable gold and treasury bonds.

And there’s reason to believe that the markets will keep falling in the great financial crisis of 2008. Some major macroeconomic indicators point to tough times in coming quarters.

Here’s a top 5:
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I know what you’re thinking - why invest in Apple when its stock price fell 18% today? But think literally about apples, which you’ll find in any outdoor fruit stand on the streets of New York. Today, our sadly ineffective government failed to pass its so-called “bailout” plan. The meaning is clear - our economy is going to get a whole lot worse before it gets better. People are going to be out of their jobs (some estimate as many as 6 million Americans will soon be unemployed) - so saddle up the push cart, hit the pavement, and get ready to earn a living one apple at a time.

September 29, 2008 Vote, U.S. House of Representatives

What happened today was historic, and the market knew it. $1.2 trillion was erased from the market value of American stocks as frightened investors fled for the safety of gold and government Treasury bonds. The Dow Jones Industrial Average fell 777 points, the largest one day decline since the index was first published in 1896. The S&P 500 fell almost 9%, a drop not seen in two decades. Meanwhile, Wachovia Bank was bought by Citigroup for $1 a share, making it just the latest financial institution to surrender in a fear-driven downward spiral that has crushed venerable institutions like Lehman Brothers, Merrill Lynch, and Washington Mutual in recent weeks.

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