After reviewing the latest developments for both the banking system's bailout and the stimulus package currently being shuffled through Congress, one thing stands out:

The US government, including the new Obama administration as well as both houses of Congress are floundering all over the place.

Instead of applying bailout approaches that have actually worked in the past, namely the creation of the

In between Holiday parties and family gatherings, I'm encouraging you to set aside an hour or two to take a look at where you are money-wise...

I can imagine what your inner voice might be saying...

"Oh no! I don't want to go there. The economy / market has decimated my portfolio and it's hopeless to even think about my financial future now."

I'd like to challenge this thinking (not that you've had

 I'm almost afraid to read the newspaper anymore. It's beyond discouraging to see one scam artist after another ripping off people in the financial world.

You gotta read the latest from Thomas Friedman, titled:
The Great Unraveling

Friedman writes of his experience in Hong Kong recently, when an American businessman asked him an unprecendented question, "So, just how corrupt is America?"

How did

The good news:

Unless you are a member of the Palm Beach Country Club, an investor in funds that invested with Bernard Madoff’s investment firm, Madoff Securities, or a prominent politician, media mogul or owner of a sports franchise, you’re probably gonna be ok in terms of cash.

The bad news:

Bernard L. Madoff was a trusted pinnacle of society and business and he’s turned out to be a crook of massive proportions. He’s taken not only famous wealthy people down in his infamous Ponzi scheme, but has affected a number of charities and foundations as well. This means that potentially, tens of thousands of people are actually out a lot of money.

More bad news:

Shaken confidence makes for bear market behavior. And the Madoff madness is causing extraordinary losses for banks and investment companies that individuals may indeed have entrusted their money. Madoff apparently hoodwinked savvy sophisticated investment professionals.

Consider that:
Banco Santander has said its customers have an exposure of $3.1 billion through its asset manager, Optimal. Most US-based banks haven’t commented on their exposure to Madoff and his firm.

Fairfield Greenwich Group reported Friday that its clients’ investment in Madoff’s firm amounts to $7.5 billion.

For a summary of financial institutions, individual investors and charitable organizations affected, see these reports:

Who's affected by Madoff Ponzi Scheme?

Bernie Madoff's Victims

 
Take Away Valuable Lessons
No matter how much you may trust your investment advisor, bank or broker, you must be a prudent investor.

Answer: People who seek their advice and "fortune telling" for picking stocks. Yup, it's true.

Come on, folks.

I can understand that people want to indulge in a little soothsaying now and then...well, especially now given the national malaise sludge we are encountering in the economy.

 I have to admit that I'm a bit stunned that people actually believe that their psychic can pick stocks or predict

I continue to be flabbergasted at the complete disregard of risk in the financial services industry. What's truly ironic is that risk management is one of the fundamental pillars - at least it's supposed to be for a bank to be healthy.

I never thought we'd see the day where a broad-based appeal for financial executives to get back to something so basic as risk management (it's kinda like what

I've been watching the headlines over the past month about the unprecedented financial crisis - as am sure you have too.

 Here's the link to an excellent summary of what this crisis is and isn't: Mort Zuckerman's (Huffington Post) article, Anatomy of the Financial Crisis. I encourage you to read it and post your comments.

"Is now a good time to invest?"

"Should I sell everything and buy CDs?"

"What should I do to protect my retirement?"

I'm getting these kind of questions from my clients and colleagues. They are rightfully concerned.

As I've been saying for a while now, market downs are to be expected. In fact, with a thoughtful investment strategy, market downs provide buying opportunities. But don't lunge into the

While we’re all riding out the bumpiness in the market (I know, you're probably getting sea sick from the most recent declines), it’s important that you have a strong remedy for feelings of panic that often come about when you see your investments performance falling.

As you discovered in part 1, bumpiness—also called volatility—is part of what you sign up for when investing in the market.

One key

As you probably already know, the stock market has been particularly bumpy for the last 6 months. And, seemingly, the bumpiness has been going in the wrong direction! Year to date, as of October 2, 2008, the S & P Index (a proxy for the US stock market as a whole) has declined 22.87% (Source: Morningstar).

I have news for you. Declines are normal. So are rises. Investing successfully requires