A Week in the Rearview - week ending 3/28/08
In the headlines
A look at some of the market movers over the past week:
- JPMorgan (NYSE: JPM) raised its bid for Bear Stearns (NYSE: BSC) to $10 per share
- Former Countrywide (NYSE: CFC) executives are setting up a new company to profit from the real estate troubles
- The US Department of Justice approved the merger between XM Satellite Radio (Nasdaq: XMSR) and Sirius Satellite Radio (Nasdaq: SIRI)
- Existing home sales in the US were better than expected in February
- Consumer confidence continued to fall in March
- Oracle (Nasdaq: ORCL) fell as its much-watched earnings report came up short
- Motorola (NYSE: MOT) announced that it will be splitting itself into two companies
- Investors were disappointed with a report that Google (Nasdaq: GOOG) may not be growing ad clicks very fast
- US fourth quarter GDP was left unchanged at 0.6% annualized in updated data
Commentary
After such an exciting week last week, this week was comparatively quiet. In the early part of the week, the S&P 500 built on the big gains from the week prior, but lost steam mid-week and ended up losing ground for the week.
The embattled investment bank Bear Stearns, continued to absorb a lot of press ink during the week. On Monday, acquirer JPMorgan announced that it would be raising its offer to $10 per share and simultaneously taking a 40% stake in Bear to head off any competing offers. The rest of the week continued to see debate over what the Bear Stearns situation means and whether the buyout is fair.
Meanwhile, economic news continued to be poor, signaling loud and clear that the economy has not turned any corners yet. In fact, there is yet a thick fog over the US economy and financial system, leaving lingering questions of whether we should be looking for a near-term turnaround or whether investors should be anticipating further deterioration in conditions.
Looking ahead
With questions about how deep and how long the US downturn will be, further market volatility is a virtual promise. For investors saving for retirement, this volatility can be damaging because it can inspire a change in course where none is warranted.
Investors with a long term focus — five years or more — are going to be best served by sticking to a balanced investment plan and otherwise tuning out the gyrations of the market. This allows them to take advantage of the long term growth of the US and global economy without having to make short term guesses on which direction the markets will swing.
