New Money

In a note to clients this morning, BlackRock's global CIO of equities said he thinks there's a greater than 50 percent chance that November's low of 740 for the S&P 500 was the bottom of the bear market. Here's the case (bold is mine):

Central banks and governments around the world have remained exceptionally engaged in combating credit deflation, and the hopeful signs that are emerging suggest to us that the weakness in the global economy may be cresting, although a number of serious risks remain. At present, all eyes are focused on the stimulus bill being debated in Washington and on the Treasury Department. Should investors determine that the plans ultimately enacted will have an impact, a further rally could develop. We would caution, however, that for a long-term sustained uptrend to emerge, we would need to see clearer signs that the economy has regained its footing and, despite some of the improvements cited above, we still have quite a distance to go on that front.

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Ever since I hit the big 3-0, the prospect of buying a house has been on my mind. My one-bedroom apartment just isn't big enough for two people, serious furniture, entertaining, indoor gardening, and the kitten I desperately want. I'd also like to stop paying rent and put my money toward something permanent. Now that the housing industry is singing the blues, I should be dialing up a real estate agent, right? Perhaps I've missed my chance: Since last year, I've been on a stock-market shopping spree that's consumed most of my extra cash.

This predicament makes me wonder: Is it better to take advantage of a historic opportunity to buy cheap stocks or to make a down payment? Persuasive as the stock story is, the housing market is pretty alluring: Home prices nationally are down more than 20 percent from their 2006 peak, and interest rates on 30-year fixed mortgages are flirting with 40-year lows. Of course, it doesn't have to be an either-or choice: I could always bump up my 401(k) contributions while funneling money into a house fund. I decided to ask a few pros to weigh in:

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Harry Markopolos, an independent financial fraud investigator who spend nearly a decade attempting to blow the whistle on Bernard Madoff's Ponzi scheme, finally got his day with the SEC. So what do you know about whistleblowing? Here's some trivia:

• A whistleblower is most often a past or present employee of a company or organization who reports misconduct that is typically a violation of law, regulation, or a threat to public interest, such as in the case of fraud.
• According to the ASAE & The Center for Association Leadership, more than 1,000 potential whistleblowers send e-mails to the SEC each day.
• Whistleblowing goes back more than a century. According to the CPA Journal, the act initially arose in connection with the government's False Claims Act, which was established in 1863 to offer incentives to individuals who reported companies or individuals defrauding the government. It was originally introduced to target sales of gunpowder to the Union during the Civil War.
• Even high-profile whistleblowing isn't always heeded. This research from Santa Clara University's Markkula Center for Applied Ethics points out that in 1972, Firestone's Tire Director of Development sent top management a memo warning that the 500 tire was subject to belt-edge separation at high speeds. The warning was ignored, and the model remained on the market.
• An eight-year study by a Virginia Tech sociology professor, which involved interviews with 300 whistleblowers and more than 200 silent observers (people who observed wrongdoing but chose to remain silent), found that 69 percent of the whistleblowers were fired as a result of exposing wrongdoing.

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At this point in the new year, market watchers are grasping for signs of what's ahead for 2009 (see the January indicator and the Super Bowl indicator.) How about the Chinese New Year, the Year of the Ox? Although technically not an indicator, maybe it's a sign. Writes RiverSource Investments' chief market strategist David Joy in his weekly market comment:

The ox is believed to be a sign of prosperity through patience and hard work. It is considered to be patient, tireless in its work and capable of enduring hardship without complaint. These qualities may be in high demand in the current market environment. Not wanting to leave the promise of prosperity to chance, Sunday in London, Chinese Premier Wen Jiabao said that China was debating new economic stimulus measures on top of those already announced.

Like all of us, Motley Fool is hoping 2008 will also be the year of the bull. (What's the difference between an ox and a bull? Although it's sometimes called a "bullock," an ox is typically a castrated male.) Here, the Fool offers a handful of Chinese stocks with attractive P/Es.

Also worth checking out: MarketWatch's roundup of 12 experts' forecasts of that elusive market bottom.

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