In March of 2008, the world markets woke up to the news that Bear Stearns, the fifth-largest U.S. investment bank, had essentially collapsed. The fall of Bear Stearns nearly crippled the short-term money market, the lifeblood of modern finance. Bank lending ground to a halt. Municipal financing, which pays for roads, schools, and other daily essentials, evaporated. The company's fall changed the way the government regulates Wall Street, and it shook the faith of investors to the core. How did this happen? How will it affect the future of the markets? What does it mean for the individual investor? In Bailout, John Waggoner-the investment columnist for USA Today-answers these and other questions surrounding the recent market catastrophes.
As the author explains, this was a different kind of market panic. Bear Stearns didn't collapse because its stock was low-the company crumbled because no one would lend it money. The Federal Reserve then intervened, not because they were worried about Bear Stearns, but because they feared a meltdown in the credit markets if Bear defaulted on its debt. The dangers in this cycle, says Waggoner, could be bigger than we've seen in a long time. Investors need to act now in order to protect their portfolios, and Waggoner shows how. The author offers specific advice on protecting portfolio finances against both inflation and deflation through the use of Treasury bonds, gold, commodities, and real estate. He explains the critical importance of paying down debt-pointing out that paying down a 19% credit card is the equivalent of getting a 19% return on an investment! And he offers a range of other strategies to help your portfolio weather a storm, including rebalancing and using foreign currencies-as well as identifying a few strategies to avoid. Your ultimate protection, Waggoner explains, is to have a plan.
Assume we'll all get through this-you can't predicate your investment plan on everything crumbling. Start with the very basics: set your investment goals and match your investments to those goals. With step-by-step expert advice, Bailout will show you how.