The Stock & Bond Markets -
What is/was the nature of the crisis? As Paul Krugman, the 2008 winner of the Nobel Prize in Economics as well as Princeton University professor and New York Times columnist wrote, "the details can be insanely complex, but the basics are fairly simple. The bursting of the housing bubble has led to large losses for anyone who bought assets backed by mortgage payments; these losses have left many financial institutions with too much debt and too little capital to provide the credit the economy needs; troubled financial institutions have tried to meet their debts and increase their capital by selling assets, but this has driven asset prices down, reducing their capital even further." However, as I advised clients on September 17th, panic is never a good idea but neither is burying your head in the sand waiting for the storm to pass over. A lot has happened since then with the S&P 500 down almost 40% year-to-date prior to today's record rally. My advice then and now, particularly with accounts you fund on a regular basis like retirement and educational ones, is to dollar-cost- average by continuing your contributions and buying more shares at lower prices as you would if a store with products you like and need kept discounting their prices more and more. The scenario is trickier for existing accounts but, given how far the market has fallen, it's probably to late to move the funds to cash. The better strategy would be to re-balance the accounts to maintain equal percentages among a variety of fund and asset classes (e.g. domestic & international stocks, bonds ...)

Treasury bills, notes and bonds have been the asset of choice for many who were looking for the ultimate in safety given that, unlike many firms that went under, the government can print money to cover debts. If the coordinated efforts around the world work as hoped, the party is over for treasuries in the near term since money will leave secure places and find it's way back into the stock market or real estate market by those with brains, courage or intuition that the worst is over. Since, to quote Yogi Berra again, "it ain't over until it's over," bottom fishers may be proven wrong but it wouldn't hurt for bond holders to shorten their maturities since rates aren't likely to go down much further.

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Real Estate -
Home prices dropped in 24 of 25 U.S. metropolitan areas in July, led by declines in Las Vegas and the coastal cities of California, as foreclosures depressed prices and accounted for a fifth of all sales. Las Vegas had the biggest drop on a per-square foot basis, falling 33 percent in July from a year earlier while Los Angeles, Phoenix, Sacramento and San Francisco each dropped about 28 percent (note: three of the five worst-performing markets were in California). House prices in 20 U.S. cities declined in July at the fastest pace on record. The S&P/Case-Shiller home-price index dropped 16.3 percent from a year earlier, more than forecast, after a 15.9 percent decline in June. The gauge has fallen every month since January 2007, and year-over-year records began in 2001. New foreclosures tripled in Los Angeles and doubled in Seattle in the third quarter as the worst housing crisis since the Great Depression continued to deepen. Vacancies at U.S. neighborhood and community shopping centers reached a 14-year high in the third quarter, rising to 8.4 percent, as the credit crisis and slowing economy took a toll on retailers. Vacancies rose from 8.1 percent in the second quarter and were the highest since 1994 when they reached 8.7 percent. So with all this negative news, it's my belief things won't get substantially worse and real estate investors are already taking some money out of the bank and looking for quality properties at substantial discounts.