Unfortunately the media knows exactly how to influence our behavior as investors and it can be more harmful than helpful.  When the market gets volatile, the media tends to multiply that effect by making generalized statements that mislead you to thinking people are heading for the hills.  They may allude to the effect that people are stock piling their cash when truth be told, the vast majority of investors are sitting tight during the volatility.  They do this in hopes of triggering a herd-mentality.  We think there is safety in numbers so investors want to follow the herd and change course of action, when truly, this is not what should be taking place.

Uncertain times call for investors to scramble and read into third-party expert theories.  I like to remember this saying from Lauren Templeton, “Successful investing relies on rational decision-making, which in many instances requires delayed gratification.”  Always remember, keep your head in the game and do not buy into all the hype the financial media is drumming up.

Liz Ann Sonders, Senior Vice President, Chief Investment Strategist with Charles Schwab & Co., Inc. has written a nice commentary article regarding the recent announcement by the fed of “Operation Twist”.

Please click here to read this commentary.

Mark Riepe, CFA
Senior Vice Prsident, Schwab Center for Financial Research
President, Charles Schwab Investment Advisory

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

Examples provided are for illustrative (or “informational”) purposes only and not intended to be reflective of results you can expect to achieve.

Diversification does not eliminate the risk of investment losses.

Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications and other factors.

International investments involve additional risks, which include differences in financial accounting standards, currency fluctuations, political instability, foreign taxes and regulations, and the potential for illiquid markets. Investing in emerging markets may accentuate these risks.

US investors are beginning to rethink the composition of their portfolios and become more risk averse. If people become more conservative, that could possibly create a deflationary environment, which is a positive for bonds, not for equities. Corporate earnings have been strong throughout this this crisis. If you would like to learn more, click here to go to an article from International Financing Review.

Terrific video from Morningstar regarding the current bond trends.

How can stocks be approaching an all-time high if the economy is suffering from high unemployment and sagging home prices?  Watch this great video from MoneyWatch for an explaination.

CNNMoney.com is now available for mobile users on the go – and its free!  The app enables users to pick and choose from 10 editorial sections, from Technology to Small Business for a customized news feed. It also offers individual stock quote tracking, and displays video of top news and feature stories.

Get this new, free app for your iPhone or Blackberry here.

Interesting! CNN reports today that the internet uses more electricity in America than the auto industry uses to make cars and trucks.

This article takes a look at the just how much power is being used by our internet grid, the growing demand, and an argument for renewal energy:  “This is the largest demand growth in the United States,” said Greenpeace tech analyst Casey Harrell. “Is it going to be connected to old, dirty power, or will it be incentivising renewable energy?”

Google expects to see solid returns on their new foray into energy investments. “The electricity needed to power and cool the millions of servers that make the Internet hum has grown by more than 10% a year for the last decade, Rosenstock said. It now accounts for about 2% of all the electricity consumed in the United States.”

Click above to see an interview with Bill Weihl, head of Google’s Sustainability EFforts, and read the full story here.

Market Watch reports  “Like it or not, in the short run there is a trade-off between unemployment and inflation. To keep inflation low, you need high unemployment; if you favor low unemployment you have to accept high inflation.”

Check out this informative article by Irwin Keliner, Market Watch’s chief economist, about how the Fed works and the challenges its balancing in today’s economic environment.

We’d love to hear your comments below. Given this bit of chicken and egg syndrome, which do scenario do you favor?  Higher unemployment or higher inflation?  Which do you think will get our economy back on track the fastest?