It's no secret that credit markets are tight.
In fact, they are not only tight, they are almost non-existent.
There is a good chance they will remain that way for several months.
Financial institutions who are overwhelmed by failed mortgages are holding on to their capital like a drunkard with his last bottle of wine.
With the credit market strangled, companies who depend on lines of credit will find it hard to operate, unless they have a high reserve of cash.
Companies who have low capital reserves will soon be in big trouble.
This means that stocks in those companies are sure to plummet.
Many manufacturers count on credit to purchase the raw materials needed to create the products they manufacture and without those raw materials, manufacturing slows considerably.
This affects their cash flow as well as their bottom line.
The retail sector will be affected as well, because, a manufacturing slowdown will cause a shortage of retail goods to be available.
In addition, retailers will be looking for credit to stock their shelves and showcases for the upcoming Christmas season.
If they can't get that needed credit, Santa Claus may have an empty sleigh and presents will be hard to find.
The housing market will suffer even more than it has been because loans will be hard to get.
This, of course, will cause a fallout in any business or company, who relies on the construction of new homes, for the products they manufacture or supply.
Declines in manufacturing will eventually lead to transports experiencing a slowdown because there will be less products to be delivered.
So the trucking companies, warehousing and distribution centers will also be affected..
Basically, the tight credit market will cause a domino effect that will eventually reach nearly every sector.
Again, the companies affected will be those with low capital reserves.
So, If you are an investor in stocks you may want to do your research to find out if the companies in your portfolio have ample cash to outlast this credit crisis that is gripping our country.