Plus, ideas for investing now

The Dow tumbled 512 points yesterday in the market’s worst day since the financial crisis. The U.S. debt deal that could have reassured investors failed to do so, and despite a better-than expected jobs report issued today, fears of a double-dip recession are dragging markets down.

Here are thoughts from around the Web about the state of the markets and the economy.

“The conventional wisdom on Wall Street was that the economy was growing — that the worst was behind us,” said Peter Schiff, president of Euro Pacific Capital. “Now what people are realizing is the stimulus didn’t work, and we may be headed back to recession.” From Money.

“We are now in correction mode,” said Sam Stovall, chief investment strategist at Standard & Poor’s. “We could have another couple of weeks to go before it bottoms.” From The New York Times.

Kevin Cook, senior stock strategist for Zacks Investment Research in Chicago, said investors’ worst fears probably won’t come true: “This is not 2008 again,” he said. “We don’t have a liquidity crisis, we don’t have a credit crisis — this is just profit taking.” From Money News.

“We’re very bullish,” Barry Knapp, chief U.S. equity strategist at Barclays Plc in New York, said in an interview on Bloomberg Television. “To be clear, we think that the stock market represents exceptional value. The Treasury market represents exceptionally rich levels.” From Bloomberg.

Equity mutual funds bleed

Doubts about the economy are taking a heavy toll on mutual funds. Investors pulled an estimated net $10 billion out of U.S. equity mutual funds in the week ended July 27, the worst week since late May 2010, reported the Investment Company Institute via Reuters last week. It was also the first time since the week ended Dec. 10, 2008 when all equity, fixed income and hybrid fund categories had net outflows.

Time to rebalance?
With stocks sinking, it might be a good time to revisit the rebalancing question. Here’s our post on why you should rebalance and what some investors use to trigger rebalancing.

3 pieces on how to invest now

A number of sites were posting to help investors figure out where to put their money in light of the threat of a double-dip recession. A few emerging themes: emerging markets, high-quality company debt and stock, and commodities. Here’s a Seeking Alpha blogger on the subject and a piece from Reuters Money blog. Here are Kiplinger’s Jeffrey R. Kosnett’s words of wisdom, including a recommendation to buy foreign bonds and high-dividend foreign stocks.

Emerging markets one option

“Sovereign debt crises on both sides of the Atlantic have turned traditional categories of ‘risk’ on their heads. Many higher-yielding emerging markets now look like better bets than developed euro zone economies,” says the Reuters article. Zack Miller posted 3 ways to invest in emerging markets beyond BRIC last week on Wealthfront’s blog.

This Economist chart showing the levels of countries’ debt is instructive.

The opinions expressed by guest bloggers and/or blog interviewees are strictly their own and do not necessarily represent those of Wealthfront Inc. Information in this or other blogs should be used at your own risk. Past performance does not guarantee future results. Securities investments involve risk; returns in such investments vary and may involve gain or loss.

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