Model Portfolio eugeneg:EMF

The big question on everyone's mind is what will happen next? We are looking down the barrel of the possible failure of Fannie Mae and Freddie Mac and the complete collapse of Indy Mac Bank. Recently there have been rumors about Merrill Lynch and M&I Bank, and either their possible failure or being bought out.

M&I Bank just posted a 389.1 million dollar loss for the second quarter. M&I has a sizable presence in the Midwest and the Southwest. Unlike most a lot of the recent failures, M&I is better capitalized and can sustain large losses. However, they too were part of the sub prime mess and could take further losses before its all sorted out.

The markets still need sometime to sort themselves out and for investors to calm down. This however won't happen until Bush is gone from office. If you heard the his press conference during Ben Bernanke’s testimony to the House, these two speeches were night and day. Bush kept saying everything is ok, and he is optimistic, where Bernanke was talking about possible inflation, high gas prices, and higher unemployment.

Right now I would suggest buying into hard assets, currency, metals, energy, utilities and pulling money from US markets and investing in oversees corporations. Also, buying into South America, primarily Brazil, because that country is totally energy independent and therefore they are not bound by the rising energy prices.