This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Bear-Market Rally, Recession - Now What?

These are interesting, and complicated, times for investing.

The U.S. stock market peaked 18 months ago, during which time there have been some questions answered and some new questions raised. While there are a few signs of "green chutes," the best indicator, the stock market, continues to stumble along near a bottom.

Pimco's Mohamed El-Erian recently made a rather loud case for not buying stocks or government bonds on CNBC. There is news about colleges slashing budgets due to poor endowment results and news about pension plans needing to take risks previously unconsidered to meet pension obligations. Those headlines prod individual investors to consider their long-term investment plans.

Coincidentally, I have had two media requests this week (one local and one national) on the topic of what investors should do after their investments have fallen 50%, the month-long rebound notwithstanding. Making large portfolio changes after a big decline and in the middle of a deep economic recession is problematic for many reasons.

There have been financial crises before and, while the details are different, there are similarities. Similarities include a big, fast decline and several hope-raising bear-market rallies. Similarities in sentiment include denial of the problems early on in the crisis, panic as the declines accelerate and the growing belief that this time is different.

Making financial life-altering decisions is simply the wrong thing to do in the middle of a crisis. Emotions are more at play now than two years ago. How many times has more emotion helped make a situation better? More emotion likely means less logic. A financial plan calls for savings and compounded growth of those savings. You already know that we collectively do not save enough for the future. An insufficient savings rate and a lack of compounded growth add up to a longer work life and the danger of running out of money.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
AAPL $123.25 0.00%
FB $83.30 0.00%
GOOG $548.34 0.00%
TSLA $185.00 0.00%
YHOO $45.10 0.00%


DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs