Question: I keep reading that Americans are loosing confidence in our economy. What does this mean for investors?

A BuyandHolder

Answer:

Dear BuyandHolder,

A timely question, given that the New York-based Conference Board just released the latest figures...They show that the June Consumer Confidence Index dropped to 50.4, down from 58.1 in May.

That means American consumers -- you, me, our families and friends, are not optimistic about prices that we are paying for food, gasoline and the like. In fact, the Index indicates that Americans believe prices will remain high or even increase.

Specifically, the Index is based upon consumer responses to questions about their personal financial circumstances, their outlook for the country's economy and their feelings about buying or delaying major purchases.

Feeding into this concern about the economy is the fact that well-known producers are raising (or altering) products. What do I mean by "altering?" Kellogg, for example, the huge cereal maker, announced recently that it is reducing the box size for its popular cereals while keeping prices the same. This applies to Apple Jacks, Cocoa Krispies, Corn Pops, Froot Loops and Honey Snacks.

You can expect other manufacturers to do the same.

However, even though food and energy prices are rising, in terms of your role as an investor, I recommend looking for buying opportunities in this market. Companies that make products we must have regardless of price - food, beverages, over-the-counter drugs and medications.

The hard pressed economy also provides a buying opportunity in well known companies that have dropped from their historic highs. Take a look at some of your favorite stocks; it may be the right time to add shares to your portfolio. And, run through the list of stocks that make up the Dow Jones Industrial Average. You may find some "bargains" here that will round out your portfolio.

Depending upon your personal financial situation and your cash flow, this could be an excellent time to buy rental real estate or a vacation home that you could use part some of the time and rent out the rest of the year.

More Info:

The Conference Board makes its press releases available to the public. For general information go to: www.conference-board.org.

For information specifically on the Consumer Confidence Index: www.conference-board.org/economics/ConsumerConfidence.cfm

Good luck!

BUYandHOLD does not recommend any securities. The securities mentioned above are being used for illustrative purposes only and should not be regarded as an offer to sell or as a solicitation of an offer to buy.