metta8 saidI don't think that anyone really knows when the economy and/or stock market will improve. But my guess would be when we start to see that the real estate industry has bottomed out and trending back upwards. And I'm guessing that will not happen until well after 2010. The reason why I'm guessing that is because the peak of the craziest loans (the loans where people only have to pay a percentage fo the interest that built up for each month) do not change to regular payments until then. There are hundreds of thousands of these loans out there. I don't see how there wont continue to be even more foreclosures during that period and after.
I think that 2009 is really just hopeful thinking just as people originally said it would be 2008 and are now saying 2009.
Saying that, putting money into your retirement plan is still imporant. I'm not an investment expert by any means but I would think that even putting it all into money markets right now would be fine. That way your not risking the turmoil of the markets until things settle more. Use the tax benefits now and move the money into investments when you feel comfortable doing so.
When you see people who's job is the stock market saying they have taken their money out and will not put it back in until they see some stability, that should be a good enough warning for people.
I have heard estimates of the DOW hitting bottom at 5500. If you see that, it might be a good time to dive in. But again, that is only one analysts opinion.
The last of the subprime loans will reset by June of next year. There are actually fewer second quarter loans, so we can assume safely that the economy will bottom out or start to improve in the third quarter next year.
I indicated on a post here a while ago that Moody's and the S&P have for the longest time been putting out loss projections of RMB securities. Nothing should have been unexpected for our leaders or other irrationale analysts about how far this would go, and there should be little doubt now where the light att he end of the tunnell is.
It is possible for this recession (or whatever you'd like to call it) to continue into 2010. We don't know if this will encourage people to save more and spend less, or if consumer confidence will be so jarred by the instability in the markets that people will not spend much of their disposable cash.
5500 is kind of outrageous. If the DJ goes that low, the rally will be just more amazing. There are solid companies still with strong balance sheets and good P/E ratios. Even now, plenty of blue-chip companies are undervalued. I'm doubling up.
I guess I should say that since March or so, I did pull out of some riskier stuff in favor of stable stocks which pay sizable dividends.