The Stock Market Continues to Rebound

Three weeks in a row.  Credit last week's gain with some very encouraging economic news, including reports that showed the economy growing rather than receding and an encouraging jobs report.  The major stock indexes tacked on another one to two percent to gains enjoyed over previous weeks.  Over the past seven weeks, stocks have gained 12 percent, thus bringing what were substantial losses for 2008 down to small losses.  Small is better, and now the big question is whether stocks can erase those losses and get back into positive territory.  That happy scenario is certainly not a sure thing, but the mood among investors has become a lot more positive in recent weeks.

A Broad Rally on Wall Street

The recent gains have been pretty evenly shared by most sectors of the stock market.  In other words, this has been a broad based rally, which is an encouraging sign.  Among the stock sectors, the big winners have been technology, natural resources, and telecommunications.  Financial services stocks have also been showing some signs of life at last.  International stocks haven't fared quite as well as U.S. stocks over the past several weeks, but they've still rebounded nicely.  Bonds have also produced some nice gains, thanks to declining interest rates which boost bond prices. 

Smart Money Tips

• Always Keep the Basics in Mind.  While the financial services industry thrives on making your financial life seem a lot more complicated than it actually is, always keep the basics in mind. 

  • In order to become financially secure, you have to accumulate an investment portfolio. 

  • You can't accumulate an investment portfolio unless you get into the habit of saving regularly. 

  • In order to save regularly, you have to spend less than you earn. 

  • In order to spend less than you earn, you have to learn to be happy with what you've got.  

     

    The last point is crucial, but many of us have difficulty practicing it.  They want a fancier car or an imported kitchen or an exotic vacation or a larger house.  After all, the advertisers tell us that we have to have these things to be happy.  By golly, our neighbors have some of these things that we don't have, and they sure seem happy. What a crock!  The neighbors probably feel the same way about you as you feel about them.  If you can be happy with what you've got, you'll find it a lot easier to save the money to make the investments that give you financial security.  It's as simple as that. 

     

    Life is a series of choices, and as long as you think you're deprived of things, you're going to want to acquire more things.  More things won't make you any happier, but more things could put a dent in your financial future.

     

• Get rich slowly.  Getting rich quickly is a one-in-a-million long shot.  Judging from the plethora of seminars and infomercials that promise quick riches, a lot of people prefer immediate results which, we all know, are rarely achieved.   On the other hand, if you work hard, do what's needed to advance in your career, save regularly, invest those savings wisely, and periodically address other important personal financial matters, getting rich slowly is a sure bet.  If you can be happy with what you've got now, you'll enjoy more abundance later in life. 

Thought for the Week

I'm a great believer in luck, and I find the harder I work the more I have of it.

-Thomas Jefferson