Well, if you are like most people you are feeling this tough economy.  It is not a depression by any means, but it is more than just a run of the mill recession.  As can be heard on TV trillions of dollars were literally vaporized in the period between September and October.  The good news is that leading indicators are now pointing that the stock market has reached the bottom and will eventually work its way out.  Now that does not mean that we are heading right into a bull market or that there is no downside. 

The market bottom is between 7800 and 8000 on the DOW.  We may currently be establishing the second half of a double bottom.  In any case, I would look for somewhat sideways movement with some gains and losses until late spring or early summer of next year.  Now, the bad news is that the economy follows the stockmarket by about 6 to 10 months.  What this means is that it is behind the market.  So the economy is basically right where the stock market was in say April or so.  It hasn't reached its bottom and probably won't until next summer.

This means the economy as a whole has a whole lot more hurt to come.  This will come in the way of higher unemployment levels, higher ratios of job cuts and even more bankruptcies like Circuit City as the consumer curtails its spending.  The good news is that we can pretty much reliably predict that by the second half of 2009 we will be starting a recovery and a new bull market (this new bull market may not fully start or kick in until the end of 2009 or even the beginning of 2010).

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The government and overseas governments have been very proactive in halting this economies rapid demise into another depression.  The only problem with governmental intervention is that manytimes it becomes too much intervention and this can make the recession last longer and can and usually does result in more future bubbles.  I can only wonder what the next few bubbles will be?  Whatever they are they will fly and you will want to get in them early.  Most likely with countries like China and India having a rapidly growing middle class and more desire to drive and own cars (especially in China with 1.5 billion or so people) you will find it hard to argue against the idea that oil will go back up to the 100 to 150 range fairly quickly after the economies start their recoveries.

Oil is of a finite commodity (there is much more oil, but most of it lies in very deep and hard to reach places like the artic shelf and Siberia where the costs and risks are high.  The easy oil like that in the Gulf is drying up and will start dropping.  We do need to start putting more effort on developing alternative and hopefully greener energy sources and technologies.  Basically, the best advice can sometimes be sought from something as simple as a old classic boardgame - Monopoly.  Who wins the game more times than anyone else?  Not the lucky person that has Boardwalk and Park Place (the odds against you getting both of those on one turn or getting someone to trade them to you are very low and then the odds are only 2 spots on the whole board per revolution of someone landing on them).  The one who wins the most takes the railroads and utilities.  On the game they get 4+2=6 total chances per revolution of the board. 

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This same philosophy also works in life.  What does the world's greatest investor, Warren Buffett, invest in?  Railroads, energy and utility companies and related companies like insurance and great, long term companies with great balance sheets.  He does not look for a quick, risky killing like with Boardwalk or Park Place.  He leaves that to the Donald Trumps and others whom are far more leveraged and he runs them over daily as he is probably worth more than all of those risky players put together. 

The point here is that real estate has its ups and its downs - especially in casino towns like Vegas (where the housing prices have experienced a huge drop and are still dropping).  Utilities, shippers, railroads, etc... will always be in use and in demand.  The price of entry into these markets is immense so the number of competitors is small (good moat material according to Phil Town in his book Rule #1).  Companies and people have to get and receive products across the nation and worldwide and this won't stop.  People have to heat their homes and fuel their cars.  Everyone legally is required to carry car insurance and soon maybe even health insurance.

So these companies will be the best investments for the long run - its made Warren Buffett the wealthiest man on earth.  Utilities, insurance and railroads may not make you huge returns on a per year basis, but over time you can beat everyone else.  So, the world is not ending and the economy will improve - but it may take a while.  So, hang in there - recessions are as much a part of the economy as bull markets.  We will have more of them in the future and there will probably be a far nastier one in the next 5 to 10 years (for more on this be sure and read the post on recession, prophecy, what's next for our economy).  Some companies may not be around and many will survive this recession.  One thing to remember is never invest monies that you will or might need in the next 5 years in the stock market.

This is not to be taken for financial advice - for proper financial advice you should seek the help of a licensed financial advisor and be sure they are non commissioned (commissioned financial advisors will always try and sell you on products that help them the most not you!)