• What to do now in 2009
• How to get a decent return without so much risk!
• What to hold and what to sell

Before answering these three questions please allow me to recount how we got to this point in the first place.

2008 began like any normal year. The economic outlook was good as was the health of the stock and bond markets. I felt there would be some economic slowing throughout the year and bumpier ride in the stock market so I raised cash in advance. It was like the mood you’re in on a beautiful day 20 minutes before your house disappears in a Tornado.

The tornado that comes out of the blue then bam! all hell breaks loose.

First, oil rises to $148 per barrel, and everyone’s paying 4 bucks and over for a gallon of gas. Experts start predicting a rise to $200 per barrel and most other commodity prices start going up dramatically causing inflation to rise with no end in sight. (We start seeing videos of masses of people from China and India switching from bikes to cars). Then, as fast as oil prices rise, the price drops to $40 and gas at the pump is $1.80 again.

Now we hear that housing prices are declining faster than expected and many homeowners are unable to make their payments and foreclosing, so the banks start losing billions and the economy experiences a credit panic not seen in 75 years. This scares the heck out of everyone causing the stock market to unravel which is followed by a huge government bailout as banks continue to weaken. Then, established investment companies start merging or going out of business and interest rates rise dramatically on everything but Treasury obligations. The final icing on the cake for 2008 is the uncovering of the most diabolical Ponzi scheme in history. What a mess.

But just as seems it could get no worse, the panic subsides, and credit markets start to improve. (See my commentary: The Great Thaw, week of January 12, 2009)

Here we are today, bewitched and bewildered, sitting on a pile of uncertainty wondering if the storm has passed, wondering if this hellish ride is over. Hoping it is safe to come out of the bunker to assess the damage.

In order to know if it is safe, let’s look at the current state of affairs and the important numbers to ponder:

Interest Rates:

• Rates are falling.