Maybe the economy of the United States doesn’t suck as bad as the media portrays it. I mean first of all, most media focus on 1 thing: fear. Because people buy into fear, and they buy more papers. So naturally, the media is going to take advantage of the doomsday news about the stock market and unemployment etc. They sell more papers, because the average reader or viewer is more turned on by fear than say maybe more optimistic news. They focus how bad it that national unemployment hits 5% , when in reality, its not as catastrophic as it sounds.

My notes below indicate whether the economic factors have a good impact (up) or bad impact (down) on the economy overall…. Notice Real Estate and the Stock Market are not completely down, meaning there are still opportunities to be made.

Jumping in my first week of the Spring 08 semester, my Personal Finance class had a discussion about the economy. We discussed reasons to why the economy isn’t going down the drain. First off, I am no economics whiz, and I am just now starting my first classes this semester; Macro and Micro. Please don’t accept what I say, instead take for what you want.
The housing market obviously has screwed thousands of homeowners. Which brings to another point….. if you don’t own or rent a home, why are you crying about the housing market? Now is the perfect time for you in particular, specially in my hometown Sacramento, since houses are at unbelievable prices, and with record foreclosures and banks trying to get rid of homes, it is the optimum time to buy for the next few years. Hopefully, the housing market is coming to the bottom, then will most likely level out for years to come. It is slightly negative. I plan to take advantage of this opportunity for the next few years.

Inflation actually is not that bad. Sure Gas prices are going up, about $3.20 here in California, but has it really made people store their cars and take public transportation. Some, sure. Most, at least here in Sacramento, hell no. Seriously, people still drive their 10 mile per gallon trucks and S.U.V.s and students still drive to their neighborhood school. Compared to other countries, specifically Europe, our gas prices are still amazingly affordable. Once Gas kicks in around $5.00, which will happen sooner or later, then you can start to complain, a little. Food to seems to be extremely affordable, specially if you shop at Winco or other monster discount stores, and minimum wage is at $8.00/hr in CA, which will do nothing but raise inflation in the future. Right now, its about even.

Unemployment at 5%! From what I have read personally, and what my teacher preached, 5% unemployment is pretty damn sweet for the economy. It there was 100% employment, everyone has money, most likely to which they’ll use to shop, which creates high demand, which equals higher prices. With 5% unemployment, inflation won’t go through the roof, at least for now. I know unemployment is a bad thing for individuals affected by it or laid off, but as an economy, I’m cool with it.

Interest rates are unbelievably nice right now, and the stock market is dropping, but it is only correcting itself, much like the real estate market (remember, what goes up must come down). The Dow just dropped below 12,000 as of 1/22/08, but there is still money to be made as far I am concerned. The dollar is dropping, but that means our country’s trade balance goes up, and since our products are cheap for other currencies, our imports rise. Sure exports are expensive, c’mon, shouldn’t you support USA Made products if we really are in economic turmoil???

Basically, after this very elementary attempt to review the economy, my BIG POINT here is to just don’t buy into all the negative and fear-triggering crap news and media out there hitting us from all angles. The economy of the USA is not as bad as the media depicts it. Yes the economy will drop, but of course the economy will rise back up again. Its naturally fluctuating, sometimes volatile like now. Sure we might be headed for a recession, but according to our countries history, we hit a recession every 20 years, so we seem due for one. There is still lots of opportunities to make some money out there, and I, being the optimist I am, plan to focus on taking advantage of some of these opportunities.

What goes up must come down. Please understand this, and don’t let all the negative media reports out there ruin your day or scare you into thinking its the end of the world….. at least not yet.

The Financial Fraternity group I have co-founded in Sacramento are launching a competition to gain some practice with the stock market and researching, analyzing, and discussing about stocks and mutual funds. We started a private game at Virtual Stock Exchange and going to experiment with this site. This so far, is an extremely useful website to gain practical experience with the stock market, and definitely worth checking out.

Here are the guidelines for the competition:

• Each player gets $100,000.00 play money
• The duration of this 1st competition will last 90 days, beginning 1/14/08 through to 4/14/08
• All participants must have submitted their portfolio by Monday, 1/21/08.
• You required to invest at least $80,000.00, and you have an option of saving $20,000 to invest in another stock later in the competition. Besides that, you have to ride out the original $80,000 and cannot change it.
• There is a $5.00 buy-in for each participant
• Whoever earns the biggest profit gains after 90 days will win the pot, second keeps their money.
• Everyone in the Financial Fraternity playing will bring their picks to next Monday’s meeting, and from there we will kick off the competition

This is our first project/experiment with a focus on the stock market, and anyone outside of the group are also invited to join, just contact me via email. If you have any suggestions or advice, it would be greatly appreciated as well! I will track my picks on this when the competition starts next Monday.