Besides profits and dead Husseins, what does the market really love?


Which is one reason why stocks put on a happy face today. The Labor Department announced that weekly jobless claims plunged by 29,000 to 386,000 in July. That's the lowest in five months and below that magic 400,000 mark economists cite as the sign of a weak labor market.

But don't get too excited. The Labor Department also noted that seasonal hiring and firing by manufacturers make July an especially volatile month for employment figures. Moreover, today's numbers are an indication of how many people filed for unemployment benefits. In other words, fewer people were fired -- but that doesn't mean more people were, or will be, hired.

Finally, there's the question of whether some of the jobs lost over the past few years will ever return. More and more, companies are outsourcing work to foreign countries, and not just manufacturers. Call centers, information technology, and financial analysis are just some of the work moving overseas.

A recent CNN/Money article described how a Microsoft (NASDAQ:MSFT) vice president gave a presentation, "Thinking About India," claiming that Cisco (NASDAQ:CSCO), General Electric (NYSE:GE), and Dell Computer (NASDAQ:DELL) already "have this religion."

What's a Fool to do? Be prepared.

The possibility of losing one's job is the No. 1 reason everyone should establish an emergency fund. The standard recommendation is six months' worth of expenses in a readily accessible, safe place such as a money market account. (You can learn more about where to stash your emergency cash at our Savings Center.) If something should happen to your paycheck, you'll want to be able to cover your bills with something other than a credit card or premature withdrawals from your 401(k).

Meanwhile, if you're curious whether your job is on the bubble, take Fortune's "How Safe Is My Job?" quiz.