Fisher Investments Editorial Staff
US Economy

Merely Bailout Opines, Not Call to Action

By, 09/26/2008

Story Highlights:

  • Many smart folks are addressing the proposed government financial bailout plan, offering their "two cents" and sparking further debate.
  • A tense environment such as this is conducive to common investing mistakes.
  • Now is not the time for hasty action, but instead to become duly informed about the changes taking place.


After days of heavy media coverage, you likely have some specific thoughts about the government's proposed financial bailout plan. If so, you're not alone. Many smart folks have been more than willing to opine about the plan. As a result, investors may be inclined to take some sort of action. But knee-jerk reactions in any investing climate are generally wrong. Especially now. Tense environments like today are conducive to some very common, and very big, investing mistakes. Instead of jumping to conclusions, use this time to become as informed as you can about the events. You'll find it's better to know what's ahead before you jump.

Here are a few articles we've lately noted. These include the good, the bad, and the ugly—perusing them all will yield a more informed view…

To start, take a gander at Bill Gross' offer. PIMCO's über-bond fund manager wants to help manage the bailout—for free! Thanks, Bill. And all Mr. Gross wants in return for his efforts is to be given his due "props" for predicting the crisis. Now that takes chutzpah! Of course, some feel there's ulterior motive here: Managing the Bailout: He'd Do It for Nothing

Warren Buffett, the man who gave us the quote about being greedy when others are fearful, seems to be walking his talk in a bid to save us all from the supposed brink of financial doom: Buffett Buys Into Goldman Amid Wall Street Losses

Some are urging calm amid the storm of historical financial developments, assuring us that the end of Wall Street isn't nigh: This Isn't Armageddon

While many believe taxpayers will take the brunt of the cost, some view the government bailout as not only helping taxpayers, but potentially the "greatest trade ever," making even the richest hedge fund managers envious: The Paulson Plan Will Make Money For Taxpayers

In determining the end cost to taxpayers, this one seems to cover all bases. The plan is good for taxpayers, or it's bad for taxpayers, or maybe it doesn't get passed at all, which could be good or bad: Bailout Cost Unknown - CBO

As an aside to the above, we provided our view of the bailout's suspected price tag in our 09/25/2008 cover story: Dollars for Assets

Even Hillary Clinton is chiming in with feel-good thoughts about the plan, urging congressional action: Let's Keep People in Their Homes

The excitement surrounding the bailout has some folks either so giddy or frantic, they're jumping to declare the deal is done. But there's no evidence it's passed—it seems tentative at best right now. But that small fact doesn't stop them from cranking out headlines like these: Lawmakers Reach Bailout Deal and Agreement Reached on Bailout Ahead of High-Level Meeting

But just a few minutes later you'll see a quick about-face from earlier headlines declaring a deal has been struck: Economic Bailout Talks Appear in Disarray

Given the magnitude and complexities involved with the proposed plan, we'd be remiss not to offer the viewpoint from two fellows involved in resolving the last notable financial calamity, the savings and loan banking crisis: What We Learned from Resolution Trust

So, knowing what you now know, you may be wondering what to do next. We would encourage you to avoid hasty action: Note that any legislation has yet to be passed. All of the above are analyses based on what may occur. While many panic, patience will prove a virtue. If anything, the wide difference in analyses and resulting opinions above should give you a clue that deliberation is probably the best action right now.

*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.

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*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.


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