Is the small investor really to wait for Wall Street?

What a ride. Years ago I entered the stock market in a near perfect economy. Inflation was at it’s lowest since the Kennedy’s 60’s, the drop in unemployment was off the charts, and the country was headed toward it’s largest surplus ever.
Today, the news continues to be dominated by bankruptcy, bailouts, and bad housing numbers while the average investor is still in shock by the market moves last Autumn and Winter. Keep in mind the previous bull market was sustained by a leveraged economy in which everyone borrowed. Due to this reason most talking heads agree the financial markets could see a big downturn, so a more prudent approach to investing might be to ditch the buy and hold strategy made famous by billionaire Warren Buffett, and take advantage of the cycles often marked by both sizable rebounds and downturns. However, like I’ve said before, I prefer the Buffett method, so generally I ignore the sky is falling mentality.

The stains of the 2008 economy are certainty a part of 2009, and could possibly last well into 2010. Economic reports continue to show data the U.S. faces risk from substantial declines in housing prices, and contraction in housing construction. The Commerce Department released it’s reading on the gross domestic product last week, and it showed the economy contracted at a 5.7 percent pace. Next Friday the closely watched non-farm payrolls report will be released, and unemployment is expected to rise from 8.9 percent to 9.2. But believe it or not a very dim light has appeared at the end of the tunnel. For the third straight month the markets finished with gains, the U.S. consumer confidence was at its highest level in 8 months on Friday, and this past week new home starts was up, although by only a modest percentage. What does this mean for the small investor? Plenty. These factors could mean the recession is finally receding, and might allow corporations to put money back to work spurring more economic activity, and possibly fattening their future profits. Given a more optimistic outlook for corporations and coupled with the government’s $787 billion stimulus packet the picture could get rosy for the small investor willing to stay the course.