Have we reached the bottom of the recession and are things improving?

[Dick Slackman]

The stock market has had several positive weeks and some "pundits" have said the worst is over. Other have said that this is just a short-term rally in the recession and more bad things are coming. What do you think?

[Chad Fratto]

The market has had a remarkable run since the March lows, but those lows were factoring in Nationalization of the banks, unemployment growing to 12%, and uncertainty still in the housing market. All the market needed to rebound back to the 8,000 level for the Dow Jones was just some kind of good news and glimpse into the future. Little by little we've been getting good news of improvement and news that our economy is contracting at a much slower pace sooner than originally thought. It seems that ever since the first lows were hit, the Dow Jones is hovering around the 8,000 level, give or take a few 100 points. With that being said, the market closed just above 8,400 today. In my personal opinion, I feel we are topping out for now unless some great news come out, but I don't know what that would be. Good housing numbers have already come out this week, companies for the most part are showing earnings in-line with what Wall Street projected, and Bernanke said today that we could see growth by the end of this year. A few things still worry me, which may lead to a slight fallback, but not to the bottoms previously experienced. How much more will these banks need? The stress tests come out this week and it's already been said that most of the big banks will need to raise more capital. I've heard the word Nationalization pop up again, even though I find it highly unlikely our government would ever let that happen, knowing the consequences that it brings. Is GM going to survive? Consumer confidence has risen, but the amount of jobs that would be lost in a failing GM could quickly shatter the hopes of many. As you can see, I have a great passion for what I do and could go on and on about the different things that I think will happen and what I feel is best. It's hard to say if we are doing the best thing for the present and the future of our country. One thing I do know is that this is the most resilient country in the world filled with the most knowledgeable people even though we question their movements at times, but we always come out of it and I doubt this time will be any different. This is still a gift of opportunity for long-term investors and money should be invested without any regard to the daily movements. Good luck to all!

Chad

[Dick Slackman]

Chad:
You have some very insightful comments. Thanks for sharing.

I've noticed some initial signs of improvement in my own community. The number of completed home sales listed in the newspaper is up significantly, but the number of jobs listed in the newspaper is still weak. I see home builders at work again in previously dormant subdivisions. I share your concern about employment. Even if the economy turns around it may take employers a while to start hiring again. The economy will not be robust without fuller employment.

If one believes Bernanke is correct & the stock market usually precedes economic moves by 3-6 months, then we are quickly approaching time to move back into the stock market.

Dick