Financial Markets for 2009

It's like the calm before the storm. Nothing terrible has happened on the financial markets over the Holiday Season. The Dow Jones has continued to rally and is now over 9000 points. There have been no other major catastrophes in the banking system since the Bernard Madoff fraud that have hit the news. All eyes are on the inauguration of Barack Obama on January 20th.

So what are the possible outcomes?

Firstly, I think that more disruptions, panics, insolvencies and revelations of huge fraudulent schemes will occur from about March 2009 onwards. Now is not the time to sit on your laurels, but to really think about what your options are. Have you protected your cash best you can? If you have savings, have you spread it around different banks? Have you set aside at least six months cash to live on should the banking establishments take a "holiday" for a while? It's much better to be prepared and not need it, than to be caught out.

If you have some money and want to be sure of its safety then you have two possible options:
- invest in US Treasury Bills
- invest in gold and silver coins and make sure you take delivery of them. Do not leave them in a bank or other financial institution.

There are not many other options for keeping your money safe.

Do not take out any debt if you can possibly help it.

Start thinking locally. What can you do to sustain yourself as far as food, energy and supplies are concerned? Can you get together with like-minded people in your community? Take a look at the Transition Towns movement which is taking hold in many countries around the world. This is about creating a local currency where goods and services are exchanged in your own currency. For example, a local Farmers Market, or creating a community vegetable garden are ways of becoming self-sufficient in your own backyard. This can be an exciting time as well as a frightening one.

It is finding the balance between the two: preparing yourself for the worst outcomes - no different than taking out insurance - no one expects their house to be flooded or to have a fire, but if you have insurance at least you are covered in the unlikely eventuality. This situation is no different. Protect yourself as best you can. Make sure you have a survival kit and have stored some food and water at the very minimum.

Then start to explore ways of getting involved in your local community. This will be one of the keys to survival when the crisis really hits home.

Wishing you all the best of luck!