Dollars and Sense: Taking advantage of market

July 15, 2008 7:39:20 AM PDT
Jason Tyler, senior vice president at Ariel Investments, shares some ways you can take advantage of the volatile economic market. Over the weekend, the Fed committed to support Fannie Mae and Freddie Mac. What does this recent news mean for consumers?

For the average American, the Fed's decision helps avert further pressures on the housing markets. A collapse of Fannie Mae and Freddie Mac would make it harder to get a mortgage, further reducing homes prices.

What does this news mean for the stock market?

This news is a slight positive as it reduces investor fears of insolvency by the GSE's, which would fuel already heavy fears reflected in this market.

Some of the best investment managers with great track records are now troubled by poorly performing portfolios. The Dow started the year at 13,200 and it is now at 11,000, which is a decline of 16.7%.

Let's talk about the current environment. Do you think there are any silver linings here? If so, what are they?

Mutual fund managers have really been hit hard, especially value investors. The five year average for the S&P is approximately 16x forward earnings. It is now trading at less than 13. So what is the upside to this? Stocks are cheap and there are good deals to be had. Do some research and look for strong companies that have been around for a long time. Also, if you are in the position to do so, this is a good time to increase your 401k contribution. If you work for a company that offers an employee stock program, see what they are offering. You might be able to purchase your company's stock at a lower price.

Research - There are some good deals out there

Increase 401k contribution

Participate in employee stock program

Big deals on big ticket items

There are amazing savings on many large items right now, especially homes and cars. Everyday we hear how bad the real estate market is doing and no news of any light at the end of the tunnel. There are many houses that have been on the market for an extended period of time and owners are looking to unload these homes fast. This can mean good deals for prospective home buyers.

Just like real estate, you can find great deals on another big ticket item: cars.

In order to clear their lots, many dealerships are offering attractive incentives and rebates in addition to low price tags. The average new vehicle is selling at its lowest price in seven years.

Huge savings on news car and homes

Take advantage of these savings

Negotiate for best possible deal

Take advantage of points and miles that are building up -- Now is the time to redeem.

So many of us have unused miles and rewards points waiting to be redeemed. Take the time to find out what you can cash these in for and do it now. Do not let these go to waste. Credit cards and airlines are making it more difficult to redeem miles for travel. There are more restrictions that you have to get around, more black out dates and a higher amount of miles needed for tickets. You have already spent the money in took to earn these points and miles so use your miles now while they are still good.

Do homework -- find out what points/miles are worth

Use miles before more restrictions are implemented


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