Implications of Wall Street Happenings

The bottom line looks like this: In terms of the stock market there's no doubt that investors have less wealth than they had a month ago or in March, 2000. That said, investors have an enormous amount of wealth today, securities worth many trillions of dollars. Still then there are many retail investors who will find it hard to digest the way things are shaping up in Wall Street.

As an investor the most important question that I will ask to myself is -Where the stock market goes from here. There's an argument to be made that many companies were over-priced and that a "correction" was due. We have already seen the bottom drop out of the market for Internet and high-tech shares, in large measure because firms could not deliver projected earnings -- or any earnings. So from now on I will be much more cautious in gazing the trends of the market and following it.

Lower share prices mean huge problems for many "new economy" companies. Rising stock prices essentially allowed these firms to print a form of money: They could trade shares for existing, profitable companies and they could attract skilled workers at low salaries by offering stock options. New economy firms could issue more shares to raise additional capital, and they could issue convertible bonds with the expectation that most bondholders would want to convert to stock. But if the enormous big Wall Street continues to fall it will definitely have a negative impact on these fronts.