U.S. financial problems still plague markets

February 20, 2009 11:46:45 PM PST
Friday was another grim day for anyone with 401k plans and other investments in the market.

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At one point on Friday the market was trading near a 12-year low, before it rebounded and gained back half of its losses.

It was another troubling week closing on Wall Street, as once again the bank stocks dragged down the entire market.

From street corners that scroll stock updates to computer screens that flash red, there was no escaping the meltdown on Wall Street.

"The panic is driven by the fact that we, the government and the regulators, haven't figured out how to solve the current financial crisis," said Brooks Nelson, from Nelson/Roberts Investment Advisors who has been a financial advisor for 20 years.

Housing prices continue to drop, the U.S. Auto Industry is in turmoil, and the bailout hasn't eased consumer credit or restored confidence in the banking sector.

Since October 2007, the value of company shares on the dow has plunged nearly $2 trillion. For many people that loss can be seen in their 401k and other investments.

Ben Andrews says he made a wise move putting a big chuck of his portfolio into Wal-mart -- a company that is holding its own thanks to price-conscious consumers.

"It really hasn't dropped that much at all. It has gone down, but not like we've seen in other stocks," said Andrews.

The already battered financial stocks took another hit Friday amid rumors the government rescue plan could involve the nationalization of some banks which would render the stock virtually worthless.

The Labor Department says retail prices rose in January for the first time in six months and that is actually good news because many economists are more worried about deflation than anything else.

"We're all children of inflation. We know what to do when prices are rises, but our grandparents are the last ones who can recall what it's like to live in a deflationary period," said Nelson.

Consumer prices rose .003 percent due to increases in energy prices. You may have noticed that at the gas pump, but at the retail level, over the last year retail prices have remained flat.

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