Riding Out the Summer Stock Market

Keenan Hauke with Samex Capital

There is a decent chance that the last few months have left people feeling in the dark about what our government is doing, and also confused about the direction of the global economy. We’re lucky. We live in Indiana, which has the highest job growth rate of any state in America. We live in Hamilton County, which has one of the lowest unemployment rates of any county in the country. But it sure feels like there is a storm out there somewhere, and we have to do more than hope it doesn’t hit our house or rock our long term planning.

While I am sure you are doing everything you can to protect your career and keep your employment prospects alive, there are a lot of forces that might seem out of your control. Financial contingency plans, such as having enough saved to cover months of living, are one thing. It is a lot different when it comes to the real estate market or the value of your retirement
plan.

There is good news on a few fronts, and in some areas the news is simply less bad than it was. Real estate doesn’t look like it is going to go up anytime soon, but I don’t think we are going to see any more 15-20% annual drops, either. Five to 10 years from now, the housing market should look a lot better, though. There is some good news from the bond market. Fixed income prices are up for the year, but as I wrote two months ago, I don’t think the bond market is a safe place to be going forward. This is an opportunity to lock in some gains. In the stock market, where people have most of their retirement savings, the second quarter of 2010 was pretty vicious on the downside. But evidence suggests the worst is over, at least for the intermediate term. The next three to four months should bring some up-trending prices, which will allow investors an opportunity to re-assess.

Besides taking profits in the bond market and putting some of that money into stocks, there really isn’t a lot of action to take. Enjoy the rest of the summer, and we will get together in a month and see if a big opportunity presents itself.