Sign of the Times

The DOW has reached 6821 as I write this, exacerbated by AIG losing $61B, the largest company quarterly loss in history.  The company insures 30 million U.S. policy holders, operates in 130 countries, and provides insurance for 100,000 companies.  The federal reserve and treasury still maintain that they have to rescue them because of the 'systemic risk' to the global financial system.  In addition to the $150B invested, another $30B is on its way. This is a deja-vu with more to come.  The share price is $.48; last year it was close to $50.  This company should be broken up into several companies, giving it less power to disrupt the financial world when there are earthquakes like what is occurring at this time. Citi is trading at $1.40 as a result of the latest government intervention.  BAC is trading at $3.31.  Even though the president said the banks are going to remain private, the action taken with Citi still crucified the shareholder, also diluting his intention. 

Also, companies like GE who are part of the DOW 30 is being hammered with a price of $7.64 this morning, one that Mr. Buffet has invested heavily in.  It's a sign of the times; solid companies being traded at prices not imagined before.  And there are so many firms trading as penny stocks now that the SEC is looking at altering their procedures in terms of the requirements of companies falling into this group.

I do see a pinpoint of light.  We went to Redding yesterday, visiting 5 different stores, to look at big ticket items, and noticed  movement in this area.  In conversation with the employees, we heard that people are using their tax refund to purchase big ticket items.  This is a sign, in my opinion, that Mr. Bernanke may be right in saying that the worst will be over in 2009.  For those of us who are invested, I think the prudent action is to stay the course as long as the company or fund appears to be managing in a way to come out intact.