Market Turmoil

I just wanted to briefly comment on yesterday's news of Merrill being bought out by Bank of America, Lehman Brothers filing for bankruptcy protection and AIG seeking liquidity. I know the news is bad and lends to feeling anxious in a market that is already fragile, but this is not a time to panic. The truth is when we look at markets historically, it has always been plagued by one disaster or another and somehow the markets manage to march on. If anyone remembers the Savings and Loan crisis of the 90's, bad news was a daily experience, in some ways as bad if not worse than what we are living through now.

I also know that questions arise as to the protection of assets at an institution that has been purchased or has filed for bankruptcy. Generally speaking, brokerage accounts are held in custody for clients and are therefore protected from bankruptcy or sale. Anyone with a Merrill account will soon have a BofA account. In addition, the government insures brokerage accounts for up to $500,000 and most of the large brokerage firms have additional insurance to protect even larger amounts. However, this insurance does not protect against loss in account due to the market going down!!!

Bank deposits are insured for up to $100,000 per account per bank by FDIC insurance. This includes CDs ,checking accounts and savings accounts.