People, get ready

With the ferocious rebound/Sucker’s Rally [Tuesday] and a less-bad ADP employment number [Wednesday], it looks like we may make it into late spring or early summer before the markets threaten to tank again.

I’ve said this before, but want to emphasize it again – get your fiscal house in order. This is a delusional rally based on expectations that have little foundation on corporate profit, balance sheet health or consumer spending trends.

AKA, whistling past the graveyard… But none of the fundamentals have changed. Investment banks, mortgage companies, and homebuilders are still in wobbly condition. Japanese financial writedowns continued for three years into their recession. We’ve had what, six months of them? More is coming. Hey, when a major investment bank goes from solvent to bankrupt in 5 days, this is an important clue that all is not well with the banking system.

I still expect 2008 to be The Year Everything Changes, but you still have time to position yourself economically (and geographically) to prepare yourself for massive volatility and to prepare to take advantage of that volatility while others stand still in shock.

Now is a real good time to – if you can – pare down as much debt as possible and get into cash. Opportunities may well come later for those who did, but first there will probably be some seriously teeth-rattling speed bumps. Too many though, faced with rising food and energy bills, will not be able to do anything to prepare and, as always, those least able to financially cope with a shaky economy will take the brunt of it.

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