After the Financial Chaos in the Banks- Than What?

There appears to be news out every few hours. Another one of the banks is failing. A few others are being bought out. Another is declaring bankruptcy. And still another seeks more capital.

As an investor, it’s easy to get caught up in all of the news and become paralyzed.

It’s easy to panic.

But unless you’re an investor in any of these financials, then your strategy should shift another direction. You should ask:

What companies are going to make money, regardless of what is going on in the financial sector?

There are plenty of choices.

Investors should look at companies like Phillip Morris International (PM), which sells cigarettes and tobacco products around the world. It doesn’t really care what happens to Lehman Brothers. It’s selling tons of cigarettes either way.

Same with Coca-Cola (KO). Or Proctor & Gamble (PG). Are consumers suddenly not going to buy detergent? Nope. People still have to clean their clothes. And they’ll still drink Coke.

Keep your eye on the prize - especially if the stock market retreats further. Great companies are going on sale.

What the Financial Chaos Says about our Economy

Does it mean anything that our banks are going under? Of course it does. But the economy is much, much more than just banks and insurance.

If you’re in New York City or Charlotte, you’ll feel the effects more than other cities. But Houston and Dallas, booming from higher energy prices, won’t see a direct affect. Neither will Minneapolis or Denver.

Where you’ll see effects are in the risk taking of the remaining banks. They will be loath to lend money- to either businesses or people. That’s where we’ll all feel the real hit. Less money means it will be more expensive to borrow. That means growth will slow. And that affects us all.

Keep your cool. Look for opportunities. Think long term.