It really is unclear as to when stock market investors will get their confidence back. As has happened many times previously, the Federal Reserve took a significant policy action (reducing interest rates another 75 basis points) and the stock market rallied only for a day. This is not a good sign.
Previous policy actions have seen the stock market rally on news, and then quickly return to its bear market sentiment. Even oil and gas stocks are going down in this market.
I don’t think we’re going to get out of the current malaise at least until the new President is elected.
As I research the markets daily, I am really taken aback by the amount of terrible experiences people are having with this whole subprime mortgage mess. I’m reading a lot of stories about people being outright deceived by their mortgage service companies, by their banks and by their mortgage brokers.
One story really bothers me. One poor lady was repeatedly assured by her mortgage broker that her monthly payments included all the pertinent taxes and insurance, only to be told by her mortgage service company that those fees weren’t included. Not having budgeted for these extras after all the paperwork was signed, three months went by when she couldn’t afford to pay them. She saved up as best she could and finally sent a check by registered mail for the amount owed. The mortgage service company promptly cashed the check, kept the money, and then told her the mortgage was in default and foreclosed on her house.
There is a lot of blame to go around out there for the subprime mortgage mess; but, in many cases, it comes down to the fact that consumers were sold a product that they couldn’t afford. It reminds me of my days as a stockbroker when I learned very quickly that securities were products that weren’t bought by investors — they were products that were sold by salespeople.
It’s buyer beware out there. It always has been and it always will be.