Got my money back from Uncle Sam

My money (so called "stimulus money") was refunded yesterday from IRS. So will we spend and help the economy? Probably not much: our rent's going up by $400 per month since we will move from a lease to month-to-month rent.

Meanwhile, my stock investment turned negative again (I'm about 80% short of the market and 20% cash). In mid-January I was ahead by 24% but now I'm under 5%. Not a big deal since fundamentally, the market cannot continue going up as it has been. Why? PE is high and getting higher since companies are reporting lower profits compared to previous year for the past 2 quarters (Q3'07 was -24%, while Q4'07 was -56%) and this quarter is -18% so far. The trend is down and as people have less money to spend on non-essentials (food & energy), the whole economy will continue to shrink. Some have their pay cut: for example, my parents are on social security and pension payments and they are now getting $30 less per month from their pension this year. Less income, plus more necessary expenses equals less discretionary spending.

So people are turning to other sources of money: retirement savings, credit cards and stuff. Just today I saw news item about lots of stuff are put on sale online, the biggest items put on sale are things like RVs which are recreational and requires gasoline/diesel to enjoy.

Copyright 2008, DannyHSDad, All Rights Reserved.

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