Bank of America proudly announced that it would buy Merrill Lynch for $46 billion in Sep 2008. Today, its market cap is $38 billion.

Bank of America’s CEO Ken Lewis had dreams about buying investment banks and asset management companies. He jumped at the opportunity of buying Merrill Lynch just because of that. He also shot himself in his foot.

Today, it’s clear that Bank of America didn’t do proper due diligence. The bank suffered heavy losses due to the losses in Merrill Lynch. Bank of America knew about these losses after December 5, 2008 shareholder vote to approve the deal to buy Merrill Lynch. But, it didn’t disclose the losses before closing the deal on Jan 1, 2009. Bank’s investors are furious about the lack of transparency.

Bank of America was secretly negotiating with Fed officials for more bailout money because of the mounting losses in Merrill Lynch. Investors are kept in dark for the whole time. Today, Bank of America received emergency capital injection of $20 billion from Fed. There may be more capital injections in the future. I think it’s better to stay away from bank stocks until we know everything about what is really going on with these guys.

Many investors are always asking what will be the next catalyst for the stock market and what could drive weekly or even daily trading action in the market. For one day, one week, or even a few weeks; a single event that raises the confidence of investors or consumers can drive the stock market higher, but in the end it will always have to be the fundamentals that get things to turn around for long haul.

So many times throughout this economic downturn and horrible stock market action we have heard strategists on television giving a “compelling” reason that stocks have hit the bottom. Thus far all of there reasons have struck out. Why have they consistently struck out with their calls of a bottom in the market? Simply because the fundamentals of the economy and the stock market aren’t yet showing any signs of recovery, in fact they are getting worse and worse.

What exactly are the most basic fundamentals of the economy? Our economy is a consumer driven economy so the most important fundamentals are consumer spending (retail sales), gross domestic product, trust in the overall economy, and employment numbers. The United States GDP is extremely reliant on the consumer, as personal consumption accounts for over 70% of GDP. The basics of the stock market are similar, but slightly different. The fundamentals of the stock market are things such as: corporate profits, trust in the system, amount of uncertainty in the system, and simple supply and demand and the willingness of investors to take on some risks.

The bottom line is in the end you should invest based on how the fundamentals of the economy and the stock market will do. A certain event may change how the market reacts for a limited amount of time, but in the end the fundamentals will always be the train that drives the market and the economy either higher or lower.

Let’s be honest, right now is a terrible time to be looking for a job, but there are lots of people who are forced to be looking for one because they have lost their job, or even because they have been cut back to part time. Many employers are cutting hours back to cut costs, which saves the company money, but leaves the worker unable to pay all the bills they are getting.

I wanted to take a look today at some areas that may offer some job opportunities for the future. There are a few specific jobs that look like they are particularly on the rise despite the horrible economy, and there is no reason why these areas won’t continue to grow in the future. The first of these jobs is the healthcare industry. The healthcare industry continues to be the one consistent grower in the monthly non farm payroll data provided by the BLS. Why is the healthcare industry so strong? The baby boomers are aging and new medical technology is being made available to them, and no matter the economy people have to take care of themselves. Healthcare is a definite area of growth for the future. Secondly, alternative energy companies are in need of employees because the push is truly on now for alternative energies to reduce our dependence on foreign oil. Positions at these kind of alternative energy centers can be tricky to find, but if you get in, you will certainly be rewarded nicely. Thirdly, if you are looking for more of a flexible work from home job, freelance writing is a job that is growing quite nicely. If you are a good writer and want to have some flexibility, consider becoming a freelance writer. Working from home is not good for many people since many tend to slack off or become distracted too easily, but for some it can be perfect.

Consider the above career ideas in this rough economy in 2009. Look for jobs in areas that are growing in 2009 and will provide you a good solid income source going forward!

It is often said that the stock market is one of the best predictor’s of the end of a recessionary period. Typically, most analysts believe that the stock market bottoms and begins to rebound at least 6 or 8 months before the economy actually puts in its bottom. The stock market has obviously performed very badly and has done its job well of predicting the horrible downturn in the market, but will it once again be a leading indicator to the upside as well?

The truth is the returns from the stock market that start to turn upward really should cause at least some strengthening in the economy, at least theoretically, during any time period. Why is this? Many families have a decent amount of money in the stock market and as the stock market begins to firm up it will likely make them feel a little more comfortable about going out and spending their money.

Counting on the stock market as your single leading indicator that the economy will turn around nicely can be quite dangerous though. The current economic condition we are in may well be worse than any that almost anyone living has ever seen, so old statistics can be thrown out the window if that is the case. Also, the stock market may rebound prematurely and the economy could very well bump along the bottom for quite some time.

Using the stock market as one of the leading indicators as to how the economy will be doing in the next few quarters is a good idea, but using it as your sole indicator is a bad idea. Look at things like the yield curve and the Leading Indicators Index, which is built to predict how the economy will be doing in the coming months. Use history as a guide, but realize that we may be in a period of history making rather than following history and its trends.

This should be a topic that most all of you have heard of quite frequently, but it deserves some extra attention in today’s economic landscape. Credit card debt is very widespread throughout the country, and it is bringing down a huge number of families in what is the ugliest economy most anyone has ever seen. Quite frankly, there is a never a good time to have credit card debt, but if there is any single worst time for it now is that time.

Debt guru Dave Ramsey believes there is no single positive to the use of credit cards. While I wouldn’t personally go as far as he does, he certainly makes some very good points. When a person pays with cash they can absolutely feel the cash leaving, but with a credit card the same sense is not there, leaving the person very vulnerable to feeling as if they have plenty to spend no matter their real situation. The number is thrown around that the average American is over $8,000 in credit card debt, and while that is disputed by some, it is certainly clear that Americans have a serious issue with paying off credit card debts.

As a wise consumer I highly suggest you train your mind to realize just how expensive that credit card you are carrying can be. If you are already in debt, please get help with your credit card debt immediately. A credit card debt consolidation company can help most people save a decent amount of money. Keep the number of credit cards you carry to a minimum! The best rule of thumb that I can give any consumer can use is this, do not spend any more monthly on your credit cards than you will be able to pay off fully when the bill comes. Credit card interest rates are very expensive and once you get behind the eight ball then you have lost to the credit card companies. Don’t let yourself get into credit card debt, especially in this economy!

Global financial crisis put all of us in a real mess. How all these started? Why the problems in American banks spread all over the world and damaged the world economy? MIT Professor Simon Johnson tried to answer that in a simple language. He started a blog to explain the crisis in detail. Checkout his blog Baseline Scenario.

Prof. Johnson’s blog has a good starting point Financial Crisis for Beginners. His explanation about CDOs is right on point. You will be able to grasp his thoughts even if you are non-finance person.

When you see a panicked market, how do you measure the fear? VIX helps you to do just that. CBOE introduced Volatility Index (VIX) in 1993. It is a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices. VIX indicates how fearful and volatile the stock market is.

VIX provides minute-by-minute snapshot of expected stock market volatility over the next 30 calendar days. VIX is calculated from the prices of S&P 500 options for various strike prices. More details and sample calculations are here.

VIX reached the record close of 80.86 in November 2008 at the height of economic crisis. It’s now close to 43. Not long ago, anything above 30 indicated high level of fear. VIX hasn’t closed below 30 in the last four months. Understanding of VIX would help you to gauge the market fear and take the appropriate investment decisions.

When the VIX is high, the stock options are priced higher. For example, if the VIX is at 25, Google March 300 calls may be priced at $23. Right now, Google March 300 calls are trading at $37.50 with the VIX at 43. This is a simplistic example – in reality, the option pricing is also depending on stock’s implied volatility. If you are an option seller, higher VIX would help you make more money. If you own stocks and want to write covered calls on the stocks, higher VIX would fetch you higher option premium. On the other hand, if you want to buy puts to protect your stocks, higher VIX would make you to pay more for put option premium.

When the VIX climbs higher, the general sentiment is that market is reaching the bottom. Traders used to believe that with all the fear in the market, there would be some kind of capitulation. That theory was proved wrong in the last few months. VIX keeps climbing higher; there is no sign of capitulation.

VIX is the good indicator to see the market trend. I personally use VIX to decide whether to sell options. Higher VIX inflates the option premiums and provide a good opportunity to sell put or call options.

CBOE introduced VIX options in February 2006. You can bet on VIX direction and buy/sell options on VIX. You can also use VIX options to hedge your investments against any future volatility. Stock options expire on third Friday of each month. However, VIX options expire on third Wednesday of each month.

If you are anxious about when the stock market carnage would end, keep watching VIX – the fear factor.

Related Links: VIX options guide | Economy in free fall

There are tons of tips floating around about how to save money in groceries. More than ever, this is the time you should really follow those tips.

#1 tip I like and follow: Don’t shop when you are hungry. You will buy lot of unnecessary food items when you are hungry. This is the reason, I try to avoid going to Costco in the evenings on the way home from work. I keep my Costco shopping only on Saturday mornings. If I go there in the weekday evenings, I tend to buy lot of breads, cup cakes and all kinds of food stuff that I don’t really use.

Another good tip is to write down the list before you go shopping. The list makes you organized and saves lot of time. KSL.com folks say that shopping entire grocery store would also save money. See the video below.

I came across another cool video on this topic by Daily Idea. It’s funny to watch. It’s lot better than watching CNBC these days.

Taking a page from grocery shop’s playbook, a car dealer in Belgium tried the “buy one, get one free” tactic. It actually worked out very well for them last month. The promotion allowed the customers to pick from a full range of new vehicles starting around $30,000, and then choose a second free vehicle carrying a price tag up to $18,000. Belgium’s Cardoen auto dealer’s commercial director said he had witnessed a tenfold increase in visitors since the promotion kicked off in late November.

May be GM or Ford should try the similar tactic in U.S. to move the cars out of dealers’ lot.

In the world of 0% interest rate, 2.8% seems little attractive. FNBO Direct offers 2.8% APY for online savings account. There is no minimum balance requirement, you can open the account with $1.

If your money is sitting idle in your stock brokerage account, earning 2.8% sounds like a better deal. I know it’s not much. But, if you just keep $50,000 in your stock brokerage account in cash, that earns almost nothing in the current environment. If you deposit the 50k in 2.8% account, you will get $1,400 in a year. Not bad, huh? Even if you want to keep the idle money in 2.8% account just for 6 months, you will be still richer by $700.

FNBO Direct is FDIC insured. There are some banks that offer little more interest for one year CD with minimum deposit of $500.  GMAC Bank offers 3.75% for one year CD. Nationwide Bank offers 3.5% for one year CD.