No Economic Bailout = Time to go Shopping?

The immediate result was a 777 point drop in the stock market. That means a lot of people lost a lot of money.

The banking sector was among the biggest losers on Wall Street on a day that saw the largest one-day drop in history for the Dow Jones Industrial Average and the biggest drop in 21 years for the Standard & Poor's 500 Stock Index. (source Bizjournals.com)

What this means for my family:

• That new microwave? On hold.
• Going out to eat? Not going to happen.
• Halloween? Glad I have that covered already.
• Candy for Trick-or-Treaters? Already purchased.

What I'm doing with the plus column on my budget:

I am not spending one extra penny on anything this month. I'm going to be buying more stock. No more speculative stock. No more Lehman Bros or Fannie Mae.

What happened with the huge drop in the stock market is that everything went on sale. It's basically like going to the outlet mall and finding that no, really, you can afford the Ralph Lauren if you want it. McDonalds is down, Kraft is down, EVERYTHING IS DOWN. The respected stocks are down right along with the joke stocks and the bank stocks and the "don't touch that" stocks.

Why people are going crazy – Fear:

Some people are losing money hand over fist right now. They're the ones that bought when everything seemed good and safe, but don't have the stomach for risk and are selling low. Interesting to note…no matter how many times you hear "buy low, sell high" there are always people who ignore it when push comes to shove. They rely on their fight or flight instinct to make the decision to sell. Sure it will feel like a relief at the moment – but will haunt them the rest of their lives.

Don't get me wrong, I'm not mocking people who have to make real, tough decisions right now about retirement and investing. If you have less than five years until you retire, by all means, get out of this crazy market. But if you don't need that money for ten or more years and you have money in stocks, please leave it alone!

Where I'm coming from:

I'm not a fan of the stock market. I consider it gambling. My great-grandmother had enough extra money to buy one stock. She had to choose between Tucker and Ford. Obviously I don't live on the French Rivera or "summer" at Martha's Vineyard, so you know which one she picked.

For most of my childhood I've heard that the stock market is a gamble. My great-grandmother is the poster child for having a diversified portfolio. If you are looking to start a portfolio, now is a great time.

Don't get me wrong, I don't think the drops in the market are over, even if the market has rallied and come up almost half of what it lost. But that's because people think the clearance is as good as it's going to get.

Where I'm going:

As the market ebbs and flows, the best way to read it is to look at when the rises and drops get less dramatic than we are seeing now. Just keeping an eye out is the best course of action right now.

Like Jim Cramer of Mad Money said last night, "These hands are made for sitting, and that's just what they'll do." For today, sitting on your hands might be the best investment advice.

It's going to be a bumpy ride, but making good decisions can lock in not only your future, but the future of your children as well.

Jennifer Gniadecki is a freelance writer in love with finances and investing.Links to her blogs as well as her portfolio can be found on her web-site!

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