For my own investments, I put my money in index funds, or funds of index funds. I might be a smidge too light in the bond funds, so I am considering changing my 401(k) contributions to put more money in bonds and a little less in stocks, but I don’t see that as an urgent matter. Then again, the overall value of the stock funds may have fallen enough that my asset allocation is on target ;P

My bigger concern is that people will continue to panic and make a bad situation worse.

Whether this is a good thing, I’m not sure. A lot of people have been blasting Bernanke as a Wall Street crony, and his action certainly speaks to this image. Providing JPM support in its ridiculous bargain-basement purchase of Bear? Opening its coffers to investment banks?

I find it hard to criticize Bernanke. I can see where recent Fed actions have (1) not improved liquidity or market conditions and (2) greatly increased the risk of higher inflation. But on the other hand, I can’t say with any degree of certainty that the alternative (not lowering rates, not taking measures to bail out banks) would be much better. For all I know, that would have meant a run on ALL banks, not just Bear, and a collapse of our economic structure (rather than the mild correction/recession that a lot of Fed-critics suppose).

I’m still steadily funneling my money into retirement accounts. It’s a rough time to enter the market as a recent college grad, but hopefully I’ll forget all about this turmoil in a decade or two. Meanwhile, I’m having great fun shorting financial stocks and buying ultra-short ETFs in my fake investment portfolios (stock games are fun when the actual market isn’t).

P.S. The $2-per-share price tag is also significant when you consider that – from what I hear – Bear’s headquarters building is worth more than the entire cost of the deal. So essentially Bear paid JPM.