Despite signs that the economy has started to recover, U.S. employers continued to cut workers.

In the latest employment report released Friday morning, the Labor Department said nonfarm payroll shrank by another 263,000 in September, pushing the monthly unemployment rate to 9.8%, the highest level since June 1983.

Back in August 2008, I designed a diversified, all-ETF portfolio before the collapse of Lehman Brothers triggered the huge sell-off of the stock market. The goal I had in mind when I built the portfolio was to have a portfolio that covers a wide range of asset classes, so it gives me the diversification I need, with both domestic stocks and foreign equities. The funds I chose for the portfolio (and their respective allocations) are:

• Domestic stocks: SPDRs (SPY): 40%
• Foreign stocks: iShares MSCI EAFE Index (EFA): 30%
• Domestic REIT: Vanguard REIT Index ETF (VNQ): 5%
• Foreign REIT: iShares S&P World ex-U.S. Property Index Fund (WPS): 5%
• Precious metal: SPDR Gold Shares (GLD): 10%
• Domestic bonds: Vanguard Intermediate-Term Bond ETF (BIV): 5%
• Foreign bonds: SPDR Lehman International Treasury Bond (BWX): 5%

As you can see, the ETFs I picked for the portfolio are all index funds (of course, back then only passive, index ETFs were available. Now there are also actively managed ETFs). The reason for choosing index funds is obvious: To have as many securities in the portfolio as possible.

I usually don’t pay too much attention to mail from credit card companies because, being very careful with my credit, I have largely stayed out of trouble. Most of the time, I don’t even read the letters that come with account policy or agreement changes. They just don’t concern me since I always pay every bill in full and on time.

Then last week, I received two letters containing price change information from American Express (AXP) for two cards I own: Costco TrueEarnings Card and Optima Platinum Card. Citing changes in the business and economic environment, AMEX says in the letters that it found it’s necessary to increase rates and fess on some of its products. Particularly, starting with the new bill cycle on October 1, 2009, Amex will raise APRs on purchases and cash advances and increase the late fee. Even though I don’t think these changes will affect how I use the cards (I never withdrew any cash using a credit card and was never late in making a payment), I decided to go through the letters carefully this time to see what will be changed, given how much talk there is about how credit card issuers are making changes to their policies when they still can.

Warren Buffett’s Berkshire Hathaway (BRK.A) filed its first quarter 13-F with the SEC last week. From the filing, you may find a few investment ideas from where Buffett is putting his money, as noted by Morningstar. At the end of the first quarter, Berkshire held a total of 41 stocks in its equity portfolio, with American Express (AXP), Coca Cola (KO), Johnson & Johnson (JNJ), Kraft Food (KFT), Procter & Gamble (PG), US Bancorp (USB) and Wells Fargo (WFC) being the largest holdings.

Though no new stock was added to the portfolio, nor was any eliminated during the first quarter, Buffett did make a few adjustments, most notably the increased stakes in two railroad companies, Burlington Northern (BNI) and Union Pacific (UNP), because comparing to auto or air, railroad offers an attractive, and energy efficient, way to transport goods. In addition, Berkshire also increased positions in two of the nation’s largest banks, Wells Fargo and US Bancorp, as bank shares hit multi-year lows in the first quarter, as well as healthcare and consumer products company Johnson & Johnson, after selling stakes in the last quarter of 2008.

The U.S. Senate overwhelmingly passed the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009 earlier this week. The House, which already passed its own version of the bill last month, also voted 361 to 64 to wrap up the legislation. Now the bill is sent to the President for his signature to become a law, which could happen before the Memorial Day weekend.

The CARD Act aims to protect consumers by preventing card issuers from hiking interest rates whenever they feel like to, charging fees that don’t make any sense, and allowing cardholders enough time to pay their bills every month. This video from New York Times explains quite well what the new credit bill means to consumers.

The U.S. IPO market is pretty much dried up. In 2008, a total of 43 companies went public, only 8 in the second half of the year, according to a report from Renaissance Capital, as the crisis in the financial market forced companies abandon plans to go public. So far in 2009, only 2 initial offerings were listed on U.S. exchanges, Mead Johnson Nutrition (MJN) and Changyou.com (CYOU).

After a slow start in the first quarter, April is the first busy month in 2009 for the U.S. IPO market with three more offerings in the pipeline, two this week: Rosetta Stone (RST) and Bridgepoint Education (BPI).

I have talked a lot about gold here. The reason is I am a believer that gold, not physical gold though, should have a place in the portfolio, not exactly for hedging against information but for diversification. Take a look at the performance of the stock market and gold since 2007, for instance. After reaching the all-time high in October 2007, the Dow has lost nearly half of its value, while during the same gold has actually gained about 10%. Of course, if you only have something like 5% of your investment in gold (invested in GLD for example), the gain won’t do much good to your portfolio as whole if the equity portion of your investment has tumbled 40 - 50%, but still that’s the little help we can always use.

Thursday, spot gold again surged more than 7% after the Fed announced yesterday that it plans to buy up to $300 billion long-term Treasuries in a bid to halt the economy from sliding into even deeper recession. The move immediately stirs up inflation concerns among investors, who then traded gold from down $30 an ounce yesterday to up nearly $70 today. That’s a dramatic turnaround. The

The economic crisis around the world has put China under the spotlight. The world’s third largest economy, who also holds nearly $2 trillion in foreign exchange reserve, has started to use its nearly $600 billion stimulus package to revive its economy, building highways and railroads, investing in education, and improving social welfare. While banks in the U.S. are struggling to clean up their books, banks in China have made $156 billion new loans in February after lending $237 billion in January (Bloomberg.com) to support the 8% growth target. And the government’s action has produced some encouraging results: Retail sales have stabilized in the first two months and power output actually increased 5% in February.

And Chinese stocks are the best performers so far in 2009. The Shanghai Composite Index has gained 18% this year after falling more than 65% in 2008, while the S&P 500 index, coming off a fresh 12-year low last week, lost nearly 9% during the same period. Some economists predicted that China will be the first country to come out of this recession. If China indeed takes this economic downturn as an opportunity to strengthen its ability to compete globally for the long-term (NYT), investors can expect to profit from China’s recovery and expansion.

President Obama is definitely trying very hard to boost the nation’s confidence. After his massive economic stimulus plan failed to impress investors about the prospective of a speedy recovery, the President himself came out Wednesday to suggest that stocks at the current level are cheap enough such that “buying stocks is a potentially good deal” ((AP)).

And once again, stocks fell, though moderately comparing to Monday’s huge sell off, with the S&P 500 index at its lowest level in more than 12 years. In fact, stocks dropped more than 30% since Obama won the election (US News & World Report), including the worst performance ever of the Dow on the day after the election and the inauguration day. Now I wonder how much confidence investors have in Obama and his plan.

Friday, the Federal Deposit Insurance Corp. (FDIC) released its last quarter banking profile (PDF) of 2008 and the banking sector is still very weak, despite hundreds of billions of dollars of infusion from the government. At the end of 2008, a total of 252 banks were placed on the FDIC’s problem bank list, up from 171 institutions at the end of the third quarter.

The combined assets at these troubled financial institutions also went up from $116 billion at the end of third quarter to $159 billion. At the same time, earnings at banks kept falling. According to the FDIC report, the banking industry reported its first quarterly loss of $26.2 billion in the four quarter since 1990, with full year net income falling to $16.1 billion, which is also the lowest since 1990. While net income fell sharply, loan loss provisions skyrocketed to $60.3 billion in the last quarter of 2008, more than twice the amount set aside in the same period a year ago. The only good news we can get from the report is the strong growth in domestic deposits. In the fourth quarter, interest bearing deposits grew by $242.9 billion. Finally, people are saving.

The first shares I ever bought were in Nortel (NT), the Canadian telecom which filed for bankruptcy protection recently. When I bought the stock, more than six years ago, I didn’t know much about investing or trading stocks. The reason I bought NT was simply because it was cheap in dollar amount. That’s right. How much could I lose with a stock at $0.47 apiece?

Since then, I have bought and sold many stocks. Some I have turned over only after holding them for a few days to make a few quick bucks. Some I have been holding for years and have no plan to sell, such as China Life Insurance (LFC) and Visa (V). For all those trades, I applied little, if any, technical analysis in determining when to buy.

Major stock indices dropped to new multi-year lows on Thursday as financials, again, and tech stocks weighed on the market. At the close, the Dow Jones Industrial Average had lost 89.68 points to 7,465.95, breaking the November 20, 2008 low. The last time the Dow closed lower was on October 10, 2002 when the blue-chip benchmark was at 7,286.27, the bottom of the last recession after the dot-com bust.

So far in 2009 the Dow has lost 1,310.44 points, or 15%. Since reaching the all-time high of 14,164.53 on October 9, 2007, the Dow has surrendered 6,698.57 points, or 47.3%.

As I mentioned earlier, gold has had a tremendous run lately. The main force behind the gold rally is the deterioration of economies around world. Despite the passage of the $789 billion economic stimulus package over the weekend, gold price has continued to climb since the holiday.

Currently, spot gold is traded at $967 an ounce, up more than $10 from last Friday’s close, breaking the key $950/ounce level. That’s the seven-month high for gold. Also, major stock benchmarks are likely to test the November lows amid jitters in the financial sector.

In case you didn’t notice, the bullion has quietly made a comeback as stocks fell. On Friday, spot gold surged $22.20 (2.4%) to reach $927.20 an ounce, the six-month high (click to enlarge the following chart from Market Club), after a government report showed that GDP contracted at an annual rate of 3.8% in the last quarter of 2008, the most in 27 years, after a 0.5% decline in the third quarter. The two consecutive quarters of negative GDP growth also marks the official start of a recession, even though economists have long declared that the recession actually began in December 2007.

2009 is less than one month old, yet there are already a few banks being closed, picking up what was left from last year. A total of 25 banks were shut down in 2008. So far in 2009, three have gone under already:

• National Bank of Commerce, Berkeley, IL: Closed on January 16, 2009, assets at close $430.9 million, deposits at close $402.1 million. National Bank of Commerce’s deposits were acquired by Republic Bank of Chicago.
• Bank of Clark County, Vancouver, WA: Closed on January 16, 2009, assets at close $466.5 million, deposits at close $366.5 million. Insured deposits were acquired by Umpqua Bank, Roseburg, Oregon.
• 1st Centennial Bank, Redlands, CA: Closed on January 23, 2009, assets at close $803.3 million, deposit at close $676.9 million. Insured deposits were acquired by First California Bank, Westlake Village, California.

During the same period last year, only one bank was closed. If the trend continues, the total number of bank failures this year will surely exceed that of 2008.

From the rates point of view only, now may be the time to shop for a new mortgage or refinance your existing mortgage.

Freddie Mac (FRE) today released its Weekly Primary Mortgage Market Survey, which showed that the average rate of 30-year fixed-rate mortgage has dropped to a new low at 4.96% from 5.01% a week ago, the lowest point since Freddie Mac started rate tracking in 1971 . Mortgage rates have been falling since November after the Federal Reserve announced it plans to buy mortgage backed securities (click on chart to enlarge).

When I first learned that Nortel Networks (NT) has sought bankruptcy protection yesterday morning via @MarketWatch on Twitter (you can follow me on Twitter), I wasn’t really surprised (OK, a little bit). Wasn’t it just a month ago when reports came out that the company was seeking legal advices for a possible filing?

Though NT later denied such an activity, I suspect the speculation never went away. After all, the company has been in a terrible shape since the dot com and telecom collapse early this decade. Though the company has tried desperately almost everything to make a comeback, it has never returned to what it was 9 years ago and the stock kept trading lower and lower amid management scandals and slumping sales.

Last week, I talked about CGM Focus Fund (CGMFX) and how the fund was hammered after oil prices plunged. Currently traded around $37 a barrel, crude oil prices have lost more than $100 since last July. Even though OPEC has pledged deep cuts in oil production, demand for oil was hampered as global economies entered recession. Yesterday, the Commerce Department reported the slimmest trade deficit in November since 2003 at $40.4 billion, thanks to falling demand for foreign goods including crude oil.

But will oil prices stay this low if the economy recovers later this year, as some economists have predicted? The answer is likely to be No. Some analysts said oil could be trading at $60 a barrel on average this year, according to Bloomberg. If that’s indeed the case, now may be a good time to position your investment (if you are investing in oil at all) for the upward swing.

July was a volatile month for the U.S. markets. The Dow Jones Industrial Average started the month with some big losses, even closing below 11,000 for the first time in two years on July 15th. But since then, the index has reclaimed some of the losses after a pair of strong rallies, fueled by declining oil price. For the month, the Dow rose a meager 0.25%, the NASDAQ rose 1.42% and the broader S&P 500 index declined just about 1%.

During the month, the Shanghai Composite Index (^SSEC) showed some signs of life, briefly going over the 2,900-point mark early in the month before settling at 2,775.72. That’s a gain of 1.45%. The Hang Seng Index (^HSI) also recovered from the deep drop in June, gaining 2.84% in July.

So what are alternative energies?

According to Wikipedia, alternative energy sources include biomass, geothermal, solar energy, wind energy, and wave power.