Greenville Magazine - April 2008 - (Page 30) from the pros Finance by with Hamilton Joseph Allen gillespie The 100-Year Flood ews headlines are filled with talk of a U.S. recession. Financial institutions are going bankrupt and are being forced to cut dividends and raise equity. Home foreclosure rates are in- n creasing. What is an investor to think? Anyone who lives near a river or flood zone has probably heard of flood plains, particularly the 100-year flood line. While many think this is a flood that will occur every 100 years, it is actually a flood that has a 1 percent chance of being equaled or exceeded each year. Flood zone ratings are used to price insurance. The more likely your home is to flood, the higher your flood insurance rate. Sitton Saab does it again!! Lowest Prices. Safest Cars. 2008 SAAB 9-3 Sport Sedan B O RN FR O M T JE S Rated Safest by the Insurance Institute for Highway Safety. all this for only $22,995 Plus 100,000 mile warranty, 3 yr no Charge scheduled maintenance! In financial markets, there are also 30-year and 100-year flood events, and current events are unfolding in a remarkably similar fashion to the Panic of 1907. This was the banking panic that led to the creation of the Federal Reserve and cemented JP Morgan’s reputation. The 1907 panic began when New York-based trust companies began to fail. As these companies failed, banks called loans, stopped making new loans and began hoarding cash which led to a general contraction in the economy. The crisis finally hit bottom after stock prices fell 37 percent and JP Morgan arranged financing for solvent lenders. Students of the Panic of 1907 know that the markets recovered relatively quickly in 1908. The lesson for investors is that some companies will go bankrupt in times of stress but one can look confidently to the future for a time when the global economy and markets will recover. It is this difference between specific companies and the broader economy that allows us to plan for long-range goals like retirement. While the questions the market currently faces are serious and nothing is guaranteed, investors can insure their long-term financial goals by maintaining a diversified portfolio. An easy way to do that is to buy broad based ETFs, like SPY and EFA, that track the large, global stock markets. n Allen Gillespie is a principal at GnI Capital Inc. Price includes any incentives, plus tax & tags. news by with WYFF 4 John cessArich WyFF neWs 4 chieF meteorologist SITTON-SAAB, MAKING CAR BUYING A PLEASURE FOR OVER 65 YEARS! Watching out 4 You Buick · Pontiac · GMC · Saab Y 2640 laurens road, Greenville, SC · 288-5600 www.SittonGM.com 30 Greenville MaGazine | april 2008 ou know the saying, April showers bring May flowers. But sometimes those spring showers turn into nasty storms. I studied severe weather at the University of Kansas. In fact, I was a tornado chaser there. So, you could say I’m in my element when I’m busy tracking http://www.SittonGM.com http://www.SittonGM.com http://www.SittonGM.com
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