Halloween is upon us, though it seems we got the trick or treat themes early this year and it certainly wasn't a treat. This October has been the worst on record since 1987 and before this weeks rally was on track to be the worst since 1931. My hope and that of most people is that we can put October behind us and move forward.
There are still fundamental issues that we need to deal with in this economy, but hopefully those issues are now reflected in the current market (and perhaps overblown).
On the bright side, GDP was barely down for the third quarter, coming in at -.3%, better than expected and if gas prices stay where they are or go lower (yes oil is down over 50% in price) we may not even see negative growth for the 4th quarter. Given the devastation and the freeze up in credit, I think the safe bet is that we will have a negative GDP in the 4th quarter - but the average American will have more money in their pocket and more to spend at precisely the time they need it - the holidays (due to falling gas prices).
Things won't be easy going forward and nobody has dealt with the fundamental issues that are causing much of the problems (housing), but I still believe the long term will reward patient stock investors and now presents a good buying opportunity. Certainly for those people who are accumulating for a retirement that is 10, 20 or 30 years away, this is the best thing that could happen to you. This market has taught a lot of people a lot of lessons about risk and diversification.
Thinks aren't rosy, but they may not be as bad as predicted either - remember, the economist are almost always wrong, how many of these geniuses predicted what happened this year in stocks? Very few.
Scott Dauenhauer CFP, MSFP, AIF