Without a doubt, investors are left shaking their heads with more questions than answers with all the news coming out of Wall Street these days. Has the market finally bottomed? Are my investments safe? What is the proper portfolio balance for my portfolio in today’s shaky financial times? All good question investors need answers to in these uncertain times!

Have We Hit a Bottom?

I have to say that the news background is certainly appropriate for a major market bottom.  I have never seen such extreme negative news really in my working lifetime (and I’ve been working in the financial field for more than 30 years).

Without question, last week’s events were the worst I’ve ever seen: The failure of a major investment banks and followed the same week by the virtual bankruptcy of the largest insurance company in the world, to say nothing of what happened just a couple of weeks ago when Fannie Mae (FNM) and Freddie Mac (FRE), the big mortgage packagers, being seized by the Federal Government ("Fannie-Freddie Bailout: What It Means to You"). So from my point of view, the recent news has been about as bleak as you would ever find it at a major market bottom.

The good news is that all of the technical evidence points to strong stock market bottom now, which are:

• High put/call ratios
• Strong oversold readings on volumes
• A large number of new lows, and
• Stocks hitting new 52-week lows for the year.

Of course, it takes sellers to push a market down, but it also takes buyers to bring the market back up, and the encouraging thing there, I believe, is the liquidity factor.

We have huge balances sitting on the sidelines in the form of money market instruments, people who have moved out of the stock market and have been waiting for an opportunity to put that cash back to work.  Money market reserves as a percentage of the market, of the stock market capitalization, now stand at an all-time high.  So, there’s plenty of liquidity there to move the market back up if people can get over their fears and if they can begin to see some sort of resolution to the problems we’re facing.
                       

How Can I Tell If My Investments Are Safe?

This seems to be the question of the month for many investors!

For banks, it’s relatively easy to tell if your bank (and your deposits) are safe. One way is to go to bankrate.com which, like Morningstar, uses a simple five-star method of evaluating banks. Then look for a three-star rating or better. I also recommend that you try to stay below the FDIC limit of $100,000 per depositor or $250,000 for IRAs—that way you know you’re insured and your money is safe (see also, "3 Simple Steps to Protect Your Money").

Speaking of insurance, again, you want to stay within reasonable limits.  I would not want to hold ...