Investors Negative, Exhausted Over Continuing Problems in Financial Markets

DJIA Now Down 9% From Recent May 2 Peak

June 22, 2008       Leave A Comment
By: Jerry Cole - Retirement, Investment

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It appears that the market wants to test the lows reached March 10 of 11,740.15. The Dow Jones Industrial Average closed Friday at 11,842.69, down 220.40 points and now down 9% from the recent high of 13058.20 hit May 2. Back in March investors were worried that global financial markets were on the verge of collapse.


Last week investors were just plain negative and exhausted over the continuing problems in the financial markets due to the credit crunch and the harm to corporate earnings that the high energy prices are causing. Oil prices rose again amid concerns about tensions in the Middle East. Airlines took a hit of almost 7% on that news.

It is becoming more and more obvious that the U.S. will have to put in place a new energy plan sooner rather than later. Ford Motor company announced new cuts in production for the second time in two months. The company is reeling as their truck sales plunge. Soaring gas prices are forcing all of the big three auto companies to take new production cuts.

One outgrowth of the energy crunch is that the U.S. military has stepped-up their push into alternate-fuels. The dependence on oil is seen as to risky. The U.S. military is the country's largest single consumer of oil.

In March Capt. Rick Fournier flew a B-1 stealth bomber across the sprawling proving grounds of White Sands, NM to confirm for the first time that a plane could break the sound barrier using synthetic jet fuel. A similar formula - a blend of half synthetic and half conventional petroleum - has been used in some South African commercial airliner for years.

The world will invent new methods of conservation and new fuels out of necessity. Perhaps that is why Saudi Arabia has offered to increase its production of oil. If we find ways to use less, the present rate of consumption may never recover.

In the meantime, be sure to keep your risk within your tolerance and stay ahead of inflation.

I invite your questions.

(The opinions expressed are solely those of the author and not Gen worth Financial Securities Corporation or of www.mybaycity.com)

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Jerry Cole - Retirement, Investment
Jerry Cole has been a Financial Planner for almost 30 years in the Tri-City area and holds and MBA from USC. More from Jerry Cole - Retirement, Investment

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