Should you invest in the stock market or should you avoid it at all costs? I truly believe there is no single right or wrong answer at this point. The stock market is more unsettled than most of us have ever seen it in our lifetime, and the volatility and uncertainty don’t look to be going away anytime soon. Does that mean no one should invest in the stock market? No, not necessarily.

Let’s take a look at a couple of different examples. First let’s say you are a 61 year old who has just retired from the manufacturing industry and you are sitting at home looking at some of the manufacturing stocks and thinking they can’t possibly get any cheaper. You are thinking it might be a good idea to invest a lot of your retirement money in some of these stocks. I strongly suggest that you not make this move. Those who are at or near retirement should be investing in safer assets, and while some of these stocks appear dirt cheap, they have appeared that way to people for many months and they just keep getting cheaper. Be careful and invest very carefully if you are in this type of situation!

On the other hand if you are a 24 year old who has just graduated and gotten a decent job and want to put a little bit of money to work in the market that is done so much, I can’t argue with scaling into the stock market at these levels. You have time on your side and you don’t have to worry about the short term volatility that the stock market will have. Over the long run the stock market is likely to perform quite nicely if you are able to stomach the volatility in the interim.

There is no single answer as to whether stocks are cheap enough now to invest in them. Take a good hard look at your personal situation now before investing in this market. Stocks appear cheap now, but they can and very likely may get quite a bit cheaper yet. Tread carefully in this volatile market!

How would you feel if someone tells you “America’s credit rating may soon be downgraded below AAA”? Paul B. Farrell of MarketWatch.com claims just that.

John Whitehead, Former Chairman of Goldman Sachs says “I think it would be worse than the depression. … Before I go to sleep at night, I wonder if tomorrow is the day Moody’s and S&P will announce a downgrade of U.S. government bonds.” That would be nasty and can bring down the Dow to 5,000.

Related Links: 30 reasons for Great Depression 2 by 2011 | American Economy Crisis

Forget the offshoring, some companies bring the work back home right here in U.S. These companies are frustrated with poor quality service provided by offshore workers and backlash from general public. Costs of workers in offshore companies are also rising exponentially every year. In just few years, it may cost you the same irrespective of whether you hire an American or an offshoring employee in India or Philippines.

Having said that, call center companies already started embracing home-shoring concept, meaning that they employ Americans to do the support job. These jobs typically pay around $8 to $14 without any benefits. More on home-shoring concept is here.

No doubt the economic times are as bad as almost anyone alive has ever seen them right now. Pessimism is growing among Americans as well as citizens across about the state of the American and the Global economies. In recent weeks there has been much more talk of turning back toward the Great Depression norm of stashing cash under the mattress because it is the safest place for it. The reality is, even though the economic picture looks terrible putting your hard earned cash under the mattress isn’t the great idea it may seem to you at first.

During the Great Depression many people put cash under their mattress because there were no guarantees in our financial system. There was no FDIC guarantee of up to $250,000 per institution as there is now. In the depressionary period of the early 1930′s if your bank went under, you were out of luck, which left a whole lot of people hurting severely. You can’t blame folks during that time period for putting their cash under the mattress, but today’s period isn’t the same. In fact, most experts believe putting cash underneath the mattress has now become one of the least safe places for your cash since many robbers target this area right away.

Today if you are putting cash under the mattress you are losing out on an opportunity cost basis based on the fact that you could be getting some kind of return for your money from simple very safe things such as Certificates of Deposit, Treasury Bonds, or Money Market Accounts. While the interest earned may not seem terribly impressive at first, it adds up over time, and in a tough economic environment every little bit that you can save up is extremely important over the long run. Keeping your money safe is tantamount, which is exactly why now is not the time to just stash the cash under the mattress.

Related Link: Lock in those CD rates

It’s not just the employees are afraid of job loss. Even CEOs are afraid that their jobs will be lost. As per a survey by the leaders in London International Leadership Summit 2008, almost 1000 business leaders believed that their jobs will be lost.

Global financial meltdown continues to takes its toll. SAP is planning for layoffs. Many companies such as Microsoft put the hiring on hold. New home constructions decreased 4.5% to a seasonally adjusted 791,000 annual rate, after falling 3.0% in September to 828,000, the Commerce Department said today. Year over year, new home constructions were 38.0% below the level of construction in October 2007. Meanwhile, home builders’ confidence in the market has plunged to a new record low amid overwhelming uncertainty about the economy.
U.S. consumer prices took the biggest plunge in 61 years during October, pulled down by a sinking economy that evidence suggests is sending inflation lower. The consumer price index dropped 1.0% on a seasonally adjusted basis compared to the previous month, the Labor Department said today. It was the largest drop since February 1947. The core consumer price index (CPI) fell 0.1% in October. It shows that inflation is not a big threat right now. When the consumer price falls, the inflation goes down. Less inflation is a good thing, but if the inflation goes down too much, it becomes “deflation”, that’s what people started worrying about now.

Related Link: It’s gloomy out there

If you have a 401k plan you have likely checked the amount you have in it lately and been extremely disappointed with your returns. The stock market has caused many employees to have their hard earned money places in a 401k slashed down to a much lower level. The important thing I want to point out to employees and investors is that the 401k is still a very powerful tool to use in building a nest egg for retirement.

What is so great about a 401k? The simplest benefit of a 401k can be the time value of money and the power of compounding interest over time. That small amount of money that you invested when you were 26 years old will mean a whole lot to you when you are retiring. A 401k is also a very flexible investment tool. You are in the driver’s seat as far as the investments in your plan, and these assets can be moved at any time. An increasingly important part of the 401k is the employer matching plan. Most employers now match employee contributions up to a certain level on an annual basis. For example, if your employer matches dollar for dollar your contributions up to $1,000, you can get a free $1,000 put into your 401k plan each year.  Perhaps the most important benefit of the 401k plan is the tax advantages it brings with it. The dividends, capital gains, and interest are not taxed until they are paid out.

What is the bottom line here? The bottom line is that while many of you may be hurting in your 401k investments right now, this is not the time to stop investing in a 401k plan. During the worst of economic times, such investment vehicles are only that much more important. Take advantage of the benefits of a 401k plan, especially the employee matched benefits. If you aren’t contributing the amount your employer is willing to match, you are just leaving free money on the table. Even in tough economic times, take advantage of the sweet deal that is the 401k plan.

Paul Michael wrote a blog venting his anger about the bailout to help the homeowners that face foreclosures. Personally, I share his feelings. We can’t just award the irresponsible speculators that gambled with the real estate market. But, it’s just beyond us. Everything went out of control, bailout is the only way to protect whatever is left in the economic crisis.

You don’t need to stop mortgage payments to get the help from the banks. Citibank recently announced that it would help the homeowners even if they haven’t defaulted on the payments yet. More on this here. Other banks like Bank of America also announced the same measure to renegotiate the payment terms with the borrowers. If you feel that you need some help in your mortgage payments, call your lender and ask to reduce the monthly payments. If they don’t agree, check with Citibank, JP Morgan Chase or Bank of America whether they can refinance at the better terms. Odds are in favor of you.

Related Link: Worst is yet to come… for Real Estate

Some people play balance transfer game. They get 0% APR credit card from a Bank-A and do the balance transfer of their existing debt to the new credit card. They pay the full amount to the credit card before 0% Intro rate expires. When the intro rate about to expire, they get the new credit card with 0% APR from Bank-B and balance transfer the debt from Bank-A to Bank-B. The cycle continues until they don’t get 0% offer anymore.

This is a nice way of keeping the debt at 0%, so no interest needs to be paid. Only catch is that if they miss the monthly payment for the credit card, the banks will hike the interest rate to 13% from 0%. If the customer forgets to pay the full amount before the 0% offer expires, he/she will have to pay interest on the balance remaining after the 0% offer expires. If you are interested in this pursuing this strategy, it’s better to keep a spreadsheet detailing the cards you received with 0% APR. The spreadsheet should have the information about card, issuing bank, issued date, start date of 0% offer and expiration of 0% offer. Also, use your outlook program or other reminder software such as Memo To Me to remind you about upcoming 0% offer expiration.

If you want to know which banks offer credit cards with 0% introductory APR, click here.

It’s official now. The 15 countries that use the euro are officially in a recession, the European Union said today, as their economies shrank for a second straight quarter because of the world financial crisis and sinking demand. More on this in Yahoo Finance.

Citibank is planning to fire 60,000 employees over next few months, starting with 10,000 this month. Its chairman also may be leaving. You can read more about this here. Sun Microsystems is also planning to layoff 6,000 employees.

Related Link: It’s gloomy out there

Just when you think we are out of the woods, something else comes up. Today started with lot of bad news. Paris-based Organization for Economic Cooperation and Development (OECD) forecast that economic output would shrink 1.4 percent this quarter for the developed countries and keep contracting until the middle of next year. OECD’s report can be found here. Economic activity is expected to fall by 0.9 percent in the US next year, by 0.5 percent in the Euro area and by 0.1 percent in Japan as OECD countries enter a protracted slowdown, according to latest projections.

The number of newly laid-off individuals seeking unemployment benefits has jumped to a level not seen since just after the Sept. 11, 2001, terrorist attacks, as companies cut more jobs. The Labor Department reported that jobless claims last week increased by 32,000 to a seasonally adjusted 516,000. It’s much higher than what analysts expected. So, the stock market is falling again today.

Last week, Cisco systems warned about declining orders. Today, Intel warned about the same and slashed more than $1 billion from its sales forecast and dialed its profit expectations way back. Intel’s profit is being hurt badly. The company’s closely watched gross profit margin will now come in around 55 % of revenue versus the previous guidance of 59 %. If this is not enough to discourage the investors, Walmart also trimmed its earning outlook because of global economic crisis.

Another gloomy data today showed that foreclosure rate is up 25 % year over a year. We wrote about real estate slowdown few days ago. Today’s data reinforces our point of view. It’s going to get uglier before the situation can turn around.

Few hours ago, George Soros, Chairman of Soros Fund Management, said “a deep recession is now inevitable and the possibility of a depression cannot be ruled out.” Ok, there you have it. Just watch your expenses and increase your savings.