November 26, 2008 - 5:25PM
Chuck Jaffe, Commentary
The economy is in the tank, the stock market has been suffering, it's no fun dreaming of a tight(wad) Christmas, and yet here we are at the end of November, supposed to be thankful for the bounty before us.
On the surface, that's a daunting task. Being grumpy and concerned is easy right now.
But it's the holidays, time to dig a little deeper emotionally. As such, in spite of current events - or perhaps because of them - here are some things that investors and consumers can be thankful for this holiday season.
Solid, steady, dividend-paying stocks.
In a bear market, nothing is more comforting than cash-flow. And while the market has depressed stock prices, it has increased dividend yields.
I recently spoke with an investor whose portfolio includes some big, brand-name companies that, like everything else, have taken a beating in the market this year. The man is nervous, but not to the point of selling because he believes in the companies for the long haul and expects them to be stronger in every way five or 10 years from now. In the meantime, he's content to keep picking up his dividend check.
It's certainly not a bad strategy, but I can't help but think that 18 months ago he might have said the same exact thing about Citigroup or General Motors. In short, focus more on the security of the dividend than the size of the yield if you truly want this kind of story to have a happy ending.
Lower mortgage rates, resulting from the Fed's actions Tuesday, likely to last well into 2009.
I'm not particularly confident that the bailout plan will help everywhere, but the one part I feel best about thus far was announced Tuesday by the Federal Reserve, which said it will buy up to $600 billion in mortgage-backed securities in a plan that will extend well into next year. The immediate impact was that mortgage rates fell sharply.
If this allows long-term mortgage rates to stay in the neighborhood of 5 percent - and that's a big if - it gives buyers more power, gives sellers a better chance of not losing their shirt and gives people with adjustable-rate mortgages time to shop around for a better deal. All told, I'm at least thankful to see a piece of the plan that appears poised to ease some of the problems created by the mortgage crises and real estate bubble, because the economy has to get through that problem before any real recovery can begin.
Gas prices dropping back to the $2 per gallon range.
In the early part of the year, whenever gas prices went up, consumer confidence went down; at the end of the year, as the stock market went down, at least gas prices came back to earth with it. For a lot of Americans, lower gas prices may have saved the holiday, making it a lot less costly to go visit those relatives.
The return of perspective.
Irrational exuberance went hand-in-hand with gross excess and crass consumption. You couldn't turn on a television without seeing some horrific sign of one-upsmanship, where it was somehow perceived as cool - rather than boorish - to throw money around frivolously.
While some of that behavior will always be there, fear of another Great Depression has people trying to be fiscally responsible, in their own lives, politically and throughout society as a whole, where a few bucks less for show means a few bucks more there to serve the right purpose in the end.
Time is money ... and it may be the one place where the value of the dollar is not decreasing.
From an individual standpoint, you can still invest your time where it brings you the most joy, and get the same return. Whether it's playing sports or reading books, getting out in the open or watching old movies with friends, nothing economic can diminish the time you put into your passions. If anything, the pressures of the current environment make the times you do your favorite things that much more precious.
From an investment standpoint, this is about recovery time, the fact that while the market has taken away some of your financial security, you hopefully have a time horizon that is long enough to allow the market to also restore some of your gains.
The best things in life are still free.
The economy may have you reassessing your priorities, values, habits and ability to meet your goals and live up to your financial plans, but it doesn't change the fact that certain things remain priceless. Family, friends and good health all still rank above money on the list of what's important in life; enjoy that, this holiday season, and it just may take your mind off the money for awhile.
No comments:
Post a Comment