September 2008 was a month to remember for the stock market. Too much happened too quickly, and much of it was confusing to even the most savvy investor. Time may provide some clarity to the situation, and historians may look back to this period of time much as we look back at this country's various rocky periods in the past – with very little interest, unless you're a historian or an economist.

Now, however, emotion seems to cloud many perspectives, as this country's economy has touched every taxpayer. But, I'm not here to lend my political opinion to a scary situation. Instead, I want to answer a few questions that were lobbed my way this past week by friends and family, in hopes that my answers may clarify a few questions you have as well:

Q. Some companies are buying back stock. Why are they doing this now?

A. When a company believes that their stock is offering a good value, they'll use money on hand to buy back its own stock. This action can create confidence in the company, if not in the markets. Buybacks are considered bullish moves, and – for it to occur now – a sign that some companies do not fear this economic crisis. Buybacks are a way to reward shareholders in a sense, as less shares on the market will make the shares more valuable. Think supply and demand.

Q. Why did oil prices spike so quickly on Monday, September 22?

A. This question is a bit harder to answer, but I know of at least three reasons why prices spiked: Hurricane Ike closed several refineries in the Gulf Coast that remain closed (supply and demand again); fear of the U.S. Dollar value dropping, which might have touched off another commodities bull-run as investors raced to buy hard assets as an inflation hedge; and, a short squeeze. No, not a bear hug...a short squeeze means that some investors who had sold light crude short needed to cover their positions. Since covering their positions involves buying shares, the short squeeze can cause an increase in the stock's price, which may trigger additional covering. The high price, therefore, was inflated, and the price may not have bothered most serious investors (although it would have created a great situation for a sale).

Q. Is it a good time to buy stocks?

A. I'm still a believer that any time is a good time to buy stock, especially if I'm purchasing stock as a drip investor or as a BUYandHOLD E-ZVester. I do have an advantage to answering this question, as I've been writing about economics and the stock market for almost eight years. Something has to sink in, right?

So, about this time of year, every year, I remind myself that October is a scary month in general for the markets. But, this year is a bit different. Many stocks were halted from short selling in September, rules that supposedly will be lifted on October 2nd . Plus, this is an election year. I'm counting on volatility (and that's an understatement).

Thanks to this volatility, I always need to remind myself to never time the market. Just when I think it's as low or as high as it can get, I'm invariably wrong. This is why I pay myself first, buy stocks on a monthly basis, and try not to worry.

Q. Is it a good time to sell stocks?

A. I have two rules for selling stocks: 1) I need the cash (liquidity), and if the stock is higher than my purchase price, I need to consider whether I can pay the capital gains tax in April next year; 2) I need the cash (yes, liquidity), and if the stock is lower than my purchase price (a loss), I need to remind myself to take the loss on my taxes in April next year. If I have plenty of liquidity, I don't worry about my stocks. Seriously. I pretend they don't exist, otherwise I'd have an ulcer.

Q. How can I limit my exposure?

A. Once again I feel lucky, as my research about personal finances has led me to make some changes in my life. One of those changes was to spread my cash savings between two different banks, as I learned that the FDIC insures my money only up to $100,000. And, some banks may consider several accounts as one account, so multiple accounts valued as one account could spell trouble if they're valued at over $100,000. I also learned that certain retirement accounts, such as an IRA, are insured up to $250,000. Believe me, I'm covered there. I'm nowhere near that amount.

While I can limit my exposure, I worry about my clients. As I tell my mother, “I'm in a recession-proof business, but my client's aren't.” In other words, will the money keep flowing in? As a freelance writer, I can see the 'hard times' writing on the wall when clients begin to send payments in late, or the work falls off, or when a client decides to take a 'vacation' in the middle of a project. This behavior started two months ago, so I knew then to quit spending on unnecessary items and to start clipping coupons in earnest.

Q. Who are you listening to for advice?

A. Right now, I'm listening with all my might to Wall Street and Washington. The decisions that are made there now will affect my parents and their retirement plans, my life, and my daughter's future. So, I can't count on just one source of information to form my own opinions. It is my money, after all.

But, I will admit that I don't read newspapers any more. That news is far too slow for me. I stick to television and I stay online, moving among all major news networks and online newspapers, several financial sites and blogs, and I count on a few people to give me a heads up on breaking news.

Is all that news somewhat of an overload? You betcha. But, I believe an overload is warranted this October. I'll let you know my temperature in two weeks, when I may have some more questions to answer.

Until Later,