Money & Investing - Banks.com

Yesterday, after losing its rally on the TARP plan, the stock market clawed its way to an overall gain at the close. It wasn’t a big gain, but it was a gain nonetheless. Today, the stock market continues its struggle against bad economic data:

• Even though jobless claims fell this past week, the month average is still at a two-decades high.
• Consumer spending remains down.
• Orders for U.S. goods fell in October.
• Oil futures are gaining on news of a Chinese rate cut.
• Pre-open results for many companies — especially retailers — showing a bleak picture.
• Dividends continue to fall as companies hoard cash.

So, the stock market is trying to tread water, instead bringing focus on two bright spots, in terms of stocks:

1. The TARP plan aimed at boosting consumer spending (with the help of more available credit).
2. President elect Barack Obama has named Paul Volcker, former Federal Reserve chair, as the head of his economic team.

Both of things are encouraging because it means that the future is pointing to a recovery — and maybe one that could take place in the relatively near future. So investors are trying to hold on. The news has been so bad for so long, that the stock market is trying to look for the light — especially ahead of the Thanksgiving holiday — and doing its best to eke out another day in the black.

At any rate, there is the possibility that expectations are so bad for this holiday shopping season that any improvement from retailers will be hailed as a success, and as good news. And, of course, there is likely to be a spike for discount retailers and dollar stores this holiday season. Cheap gifts are likely to be all the rage this year.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.

Early today, the stock market continued its two-session rally on the news that the Federal Reserve’s TARP was going to enact measures to encourage more consumer loans. Now, though, hours later, the charm is wearing off and the Dow Jones Industrial Average (^DJI) is down nearly 50 points. Tech stocks aren’t helping the cause, and there is worry that a U.S. recession will be longer and deeper than thought. And, besides, after straight days of rally, there are profits to be taken.

TARP plan and the economy

Since the economy runs on debt, the TARP plan is to “help” consumers get access to more debt. Then, with their slightly larger credit lines and fianancing options for cars, they could spend money — pumping it into the economy. The stock market liked this announcement this morning (shooting up as high as 8600), because the implication is that if consumers are spending money, companies are more likely to make profits. And that usually means higher stock prices.

The only wrench in this plan is this: What if it doesn’t work? There is some evidence that the American consumer is starting to come out of his/her debt-induced haze and realize that what is good for the economy may not actually be good for personal finances. After all, the economy thrives on having the American consumer in debt: Enough credit to keep buying things, too much debt to easily get out so that interested is paid, and not enough debt that the consumer completely crumples.

It’s that last thing that is causing problems right now. Consumers are starting to worry that crumpling may happen. With unemployment rising and other economic concerns, many consumers are cutting back. So the latest TARP plan may do as much good as all the other efforts to throw money at the problem.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.

One of the things that many investors have been shying away from is real estate. And with good reason. Real estate is having a hard time right now, and real estate investment trusts (REITs) are in trouble along with the rest of the real estate market. But, as with all things investing, if you choose carefully, now might be the perfect time to get in on the market — while there are bargains to be had.

Credit market crisis brings REITs down

The credit market crisis is one of the reasons that real estate investment trusts are having such a hard time. BusinessWeek points this out:

“The harsher credit environment and weak economy has forced some REITs to scrap or halt their development plans,” explains Robert McMillan, an S&P REIT equity analyst. “New retail and industrial space had already started declining before the September/October credit crisis (due to higher construction costs), but should plummet in 2009. Long term, this should have positive implications for the larger REITs by giving them better pricing power.”

But the potential for the future is fairly good. At some point this housing market crisis and this economic downturn are going to end. And by getting investments — including REITs — now, while they are cheap, you might be in good shape. Beth Piskora offers these as some possible REITs:

Company	Ticker	S&P STARS Rank
American Campus Communities	ACC	4
Essex Property Trust	ESS	4
Mack-Cali Realty	CLI	4
Nationwide Health Properties	NHP	4
Regency Centers	REG	4
Sun Communities	SUI	4

REITs, or real estate investment trusts, are companies that invest in various real estate related companies, developments and projects. They are traded as individual equities on the stock market, and can be added to retirement accounts.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.