The Stock Market and the 2010 Global Financial Crisis

The stock market is way too shaky for me. Though it is true that investors may buy up stocks that are undervalued, the bearish trend is expected to continue. The economic indicators are overshadowed by investor expectations, the BP oil spill and the European financial crisis. We may see the stock market DJIA fall below 10000 again before the end of the week.

Financial experts do not have an optimistic stock market outlook. A few financial experts are predicting another stock market crash. Most financial experts are predicting a very volatile stock market. I learned one thing this weekend. Stock market investors don't necessarily respond to economic indicator changes but rather to how the economic indicator changed in reference to the investor's expectations.

The investors, who are retired and have a retirement account they've been withdrawing money from as needed, are probably very concerned about the stock market volatility. If these investors are also on a pension, it helps; but any stock market investments outside their pension may still be unstable. The investors who are not near retirement age may be able to afford to hang on tight for the stock market roller coaster ride.

Today, events around the world affect the stock market. The failure of an international firm could have major repercussions on the world economy and on the stock market. A free market does not correct itself and neither does free enterprise. Both only correct themselves after an international disaster that causes needless suffering of many investors and the loss of trillions of invested dollars. Our government must never be laxed in oversight of investment institutions and government regulations of the financial investment world. Nor should we be laxed in consumer and investor protection. Transparency is the key.

Being a wise stock market investor does not only mean knowing the types of investments and risks out there. Being a wise stock market investor also requires a knowledge of economic indicators, world events and investor expectations. Something happening in a nation half ways round the world could have a detrimental effect on the stock market. The effects of the BP oil spill are a perfect example.

The BP oil spill will definitely have a long term effect of the state of the economy and eventually on the stock market. The price of fish may rise. I hope this latest effort to cap the oil spill works. Reports say it has a better chance of working than the effort this past week. Even if it works, the ecology damage is done and not necessarily contained. The firms that process and package the fish will be affected and so will their stock prices. The unemployment rate may be affected. This all trickles down to the retailer whose sales are affected by higher prices. And our government will not be so anxious to allow new oil rigs. That may be the good new for the ecology. But how will it affect the price of oil and how will the price of oil affect the inflation rate and how will that affect the value of our investments in the stock market? This should also should serve as a lesson about government regulations and independent oversight of oil drilling operations.

Because everything is interrelated and global events could affect our stock market investments and our economy, we need to streamline our whole government. We need to improve communications between White House and government agencies. Every state Governor should have a hot line to the White House. Not just to the White House -- directly to the President! We need better communications between the White House and the people. A bi-monthly press conference in the White House should be mandatory for the President of the United States. We need better transparency. Government expenditures should be available to all at some web site that is not hidden or tucked away where people have a hard time finding it. Better transparency in the quarterly financial reports will also help.

Knowledge, communications and transparency are the keys to enabling wiser investments in the stock market. Subscribing to a site that displays the stock market indicators and contains articles from financial experts is a big help when trying to navigate the stock market.