John M.Waggoner – Bailout

In March of 2008, the world markets woke up to the news thatBear Stearns, the fifth-largest U.S. investment bank, hadessentially collapsed. The fall of Bear Stearns nearly crippled theshort-term money market, the lifeblood of modern finance. Banklending ground to a halt. Municipal financing, which pays forroads, schools, and other daily essentials, evaporated. Thecompany’s fall changed the way the government regulates WallStreet, and it shook the faith of investors to the core. How didthis happen? How will it affect the future of the markets? Whatdoes it mean for the individual investor?

In Bailout, John Waggoner—the investment columnist for USAToday—answers these and other questions surrounding the recentmarket catastrophes. As the author explains, this was a differentkind of market panic. Bear Stearns didn’t collapse because itsstock was low—the company crumbled because no one would lendit money. The Federal Reserve then intervened, not because theywere worried about Bear Stearns, but because they feared a meltdownin the credit markets if Bear defaulted on its debt.

The dangers in this cycle, says Waggoner, could be bigger thanwe’ve seen in a long time. Investors need to act now in order toprotect their portfolios, and Waggoner shows how. The author offersspecific advice on protecting portfolio finances against bothinflation and deflation through the use of Treasury bonds, gold,commodities, and real estate. He explains the critical importanceof paying down debt—pointing out that paying down a 19% creditcard is the equivalent of getting a 19% return on an investment!And he offers a range of other strategies to help your portfolioweather a storm, including rebalancing and using foreigncurrencies—as well as identifying a few strategies toavoid.

Your ultimate protection, Waggoner explains, is to have a plan.Assume we’ll all get through this—you can’t predicate yourinvestment plan on everything crumbling. Start with the verybasics: set your investment goals and match your investments tothose goals. With step-by-step expert advice, Bailout will show youhow.

John Waggoner is the investment columnist and personal finance reporter for USA Today, where he writes a weekly investing column. Previously, he was senior editor at the Independent Investor, an investment advisory newsletter. He is also the author of The Fast Forward MBA in Investing, which is published by Wiley, and coauthor of The Busy Family’s Guide to Money.