The stock market recovery in 2009 has been a very impressive one. All in all things certainly look much better now than they did at this time a year ago. The possibility of a second Great Depression has been avoided and an economic recovery, although slow, seems to be starting. As an individual investor it is important to keep perspective about where we are and where we have been. The broad based S&P 500 is up more than 60% from its low set in March of 2009, and all the major indices are up in a huge way.

A day like today shows the vulnerability of a stock market that has gone so far and so fast. The overall market is very weak today after several pieces of fairly bad news. FedEx issued a very disappointing third quarter forecast, jobless claims were higherthan expected for a second week in a row, and Citigroup plunged after the government backed outof a deal to sell more shares of Citi stock at a very depressed price. All of these together caused investors to stand back and take a breather from this market. The simple fact of the matter is that when the market has performed as well as it has in the past few months any kind of negative news will likely cause more of a pause.

In an economic recovery things won’t go in a straight line upward. Continue to watch the overall long-term trends and hopefully we will keep seeing good news. The truth is we should be very glad that we are in a market environment now where negative news comes as a surprise. Remember last year when negative news was the norm and any inkling of positive news was hard to find? Keep things in perspective and keep watching the long-term trends and invest wisely!

Today’s stock market and its last hour major sell off proved that the stock market is indeed on very shaky footing, at least in the short run. The stock market was cruising along at all time highs today, when Dick Bove downgraded Wells Fargo to a “sell” rating and the market fell off a shelf in the final hour of trading. Granted, Dick Bove is a very well thought of financial analyst, but for any single call to cause a market movement of about 125 or 130 points in one hour is quite unusual.

An event like this should help the common investor to sit back and realize that there are going to be traders looking to take profits. After all we have run up more than 60% on the S&P 500 from the March lows, so some selling pressure should not be unexpected.

Corporate earnings have also been largely quite successful so far this quarter, but this kind of market has very high expectations and the first sniff of major disappointment could cause a sector, and eventually the whole market to tumble. You have to wonder right now if it wouldn’t be healthy for the market to take a pause and correct itself a little bit in the short run.

As an investor take a look at your portfolio. Are you comfortable with your investments over the long run no matter what the short-term may hold? If you are then you are probably fine just holding on, but if you’d like to protect short-term gains you might consider lightening up on certain stocks that have really moved substantially higher in the last 6 or 7 months. The longer term picture is unclear right now, but it is definitely improved from what it was just a few short months ago. The shorter term picture is that stocks seemed to be pricing in everything going just right, which could lead to disappointment in coming weeks and maybe even months.

As good as the third quarter was for the stock market, October and the fourth quarter sure got off to a rough start. The Dow fell 203 points on this first day of October and the broader S&P 500 lost 27.23, or 2.58%. The weakness today was evident from the very beginning of the session and the selling pressure didn’t let up until the closing bell rang.

What was the cause of today’s weakness? There were quite a few things to blame for today’s terrible start to the month of October. First of all the economic data released data was very disappointing to investors. Jobless claims rose much more than expected, and the ISM Manufacturing Index also came in below expectations. In addition to these problems market participants likely are trying to take some profits from the historical run up that we have seen in the market over the last few months. Finally, stocks were drug down by the stronger US dollar, which was buoyed by supportive comments from Ben Bernanke. In the end there were plenty of reasons to sell and with a market that has come so far and so fast, it fell quickly.

Keep in mind that October is historically not a great month for stocks. Stocks bucked the trend in September by finishing with a very nice result, but historically speaking seeing a pullback in the month of October should not come as a surprise to investors. How do you use a potential pullback in stocks? If you have confidence that the economy is indeed turning around and corporate balance sheets will continue to improve then now is a good time to start making out a shopping list of stocks to put on your radar that might be a good buy when the selloff occurs. The month of October has historically been a good time to load up on stocks when pullbacks occur, so keep that in mind!

It’s a fundamental lesson in economics and a lesson that all consumers and investors should understand. Even if we are in the midst of a healthy recovery it will not be a straight line up. Rather an economic recovery always has plenty of rough spots in it where it may still feel like we are in a recession. Don’t be alarmed the first time the stock market has a pretty strong move to the downside or the first time some of the economic numbers don’t show a very optimistic picture of the economy. An economic recovery is typically full of times where consumers and analysts alike question whether the recovery is real or not.

The recession we have been in was a very deep recession that will take a long time to recover from. The stock market has certainly priced in the fact that a recovery is on its way, but it may not have factored in the economic bumps in the road that are sure to come. Since September and October are typically two of the worst months of the year for the stock market, an investor should probably tread carefully with the stock market at these levels. There will certainly be some pullbacks where you can find stocks at a better price.

It’s fine to be optimistic about the outlook of the economy for your country and the world as a whole, but it is definitely wise to be realistic about the recovery. When there has been such a powerful global recession where so many have lost their jobs and the strength of the consumer has been compromised so badly, you must realize that it will take time to heal those wounds. The recovery may well be taking place now, but don’t expect a straight line up for the economy or the stock market!

Just yesterday Ben Bernanke was quoted as saying that he believes the recession is “very likely over.” That may well be true, but at this point I believe the stock market and American consumers need more than simply the recession ending. The ending of the recession is important, but right now we need to start seeing some real growth.

The stock market has been continuing its nice run of late, and is now sitting at its highest level since last fall’s debacle that sent the major market indices plunging by 5% or more a day for several days in a row. Lately it hasn’t been powerful buying that is causing the market to go upward, but rather the lack of sellers. It seems that the current environment leads people to believe that things definitely have the opportunity to get much better, but there are also many investors taking the wait and see approach.

It is important to note that the consumer in America as well as around the world are still being squeezed. The tight labor market conditions along with fairly high gasoline prices and still historically high food prices continue to pinch the pocketbook of the common middle class consumer.

If the recession is indeed over that can be a chapter we put behind us and hope to learn from the mistakes that were made that got us into the mess we have been in. The current question that should be first and foremost on every economic advisor’s mind should be how do we get this global economy rolling again. Consumers and the market are begging for real economic growth, and the sooner the better! The one thing we all know is we don’t need any fabricated growth or short-term blips on the radar, rather we need the real thing that can propel us going forward.

First of all, Happy New Year to all of the Moola Mania readers out there. I sincerely hope that 2009 is a prosperous one for you and your family.

Now that the new year is just about here the main question on many minds is, will things get any better or will it be the same old ugly mess that is the American economy and stock market of 2008? Quite frankly 2008 has been absolutely miserable for the stock market with the broad S&P 500 finishing the year with losses of about 38%. One also has to remember that in late 2007 things were very ugly as well, so the market itself is down about 50% from its high set in October of 2007.

Not to be outdone by the stock market, the economic data points have just gotten uglier and uglier by the month in 2008. The job market is the worst in at least 30 years, and consumer confidence is sliding lower than it has ever been measured before. The credit markets have yet to become unfrozen and the housing market is showing no signs of improvement. The best thing that can be said about 2008 is that it is now over with and it is time to turn the page.

While it would be easy to simply see things from a 2008 standpoint, you would be much better off trying to give your savings and investment plans a whole new starting point in 2009. I understand that 2008 has probably set you back substantially, but sitting back and pouting about 2008 won’t get you anywhere now. The economy is still in a terrible slide and the stock market is still very uncertain, but you need to prepare yourself and your personal finances for 2009. Don’t look back on the mistakes that have been made with disgust, but rather use them to your advantage in the future. Bring in the new year with a wise financial plan for your personal savings and investments.