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Business as Usual Here...

September 30th, 2008 at 02:32 pm

I don't identify with the masses. Too much panic.

In the midst of the crisis is NOT the time to start hoarding cash, saving more, and changing investment strategies. Too little too late, if you ask me.

You prepare for this stuff when times are good, and then you ride it out and hope your planning was enough.

I guess that is the stage I am in.

I haven't commented much on the financial markets because of this. Business as usual here. We aren't doing anything different. ?

I did decide on a more conservative portfolio in 2006, expecting something like this. You could argue it was a pitiful attempt at market timing. (In the long run I can't say if this was wise or stupid - and just because it might have been wise this time I am not sure I will do again in the future). But it was sure better what I See the panicked masses doing.

& I won't be calling the market bottom any time soon either.

Selling last week to buy back in next week is just crazy. In my eyes, it is no better than gambling. & in the meantime you could lose the hottest day in the stock market year. You just never know. That is the one thing I understand about the stock market. When you start pulling money in and out at random based on emotions, you generally lose. I would venture even if you pull out for a couple of years and try to time the bottom, you also generally lose.

What I mostly don't understand though is if the market has been going up 25% a year for many years (thinking some of my international funds) why does the world end with one down year of 25%? There could easily be more losses. A lot more. You could argue they were way over valued. Nope, a small dip is not rock bottom, for sure.

I see some similarities to the housing market. Our house is worth a solid 20% more than we paid for it in 2001, but the world is ending because of one bad year after a few of the most awesome real estate years ever. This is not rock bottom... This is 20% profit, for me. Big Grin


Anyway, the other interesting thing for us is we are just coming off some self-imposed tight years and so our economy has been doing REALLY well lately. (We did cut our income in half after all, in 2002. & 2007 was a very good turning point for us as far as moving forward).

I think on the flip side, there is maybe some fear that we are less ready to weather along storm because we have been in the midst of our own "storm" for a long while.

Then again, we haven't bit off more than we can chew and probably have a more solid financial plan then a lot of our peers who were flush with income these last few years. So for that I guess, we aren't feeling a lot of pinch. & maybe while we worry a bit, I don't think we have a lot to worry about.

Everything we have put forth in our financial plan is to save up when times are good, to weather when times are bad. So now is the time to just hold on and see if we have done enough preparation to weather the storm.

I'm certainly not going to go buy a new car I don't need, but I wouldn't have done that when we were flush with cash either. Wink


As far as the market? I just have to have faith in my long-term plan (which is logical and avoids the pitfalls of fear investing).

But honestly, we just don't have that much to lose. We are young and even if our entire retirement was wiped out, I know we could recover and do well.

I am trying to make mental notes because I know next time will be harder. My first experience with this was 2001, and I was very fresh out of college. It was a wonderful learning experience. This time is about the same except I have a better game plan. So though I have considerably more money in the market, I am less worried. Before we had a lot of individual stocks and such. & it did scare me off individual stock investing. & I might learn more lessons this time around. But happy enough to learn them young while I have time to catch up and implement better investing strategies.

But yeah, rather then trying to time anything, we are averaging in our purchases, we invest twice every month and my boss deposits my profit sharing (retirement)once a year, which is also very consistent dollar cost averaging.

We're buying high, and we're buying low. Ideally it all just evens out.

We have an asset allocation that we can live with through thick and thin. Etc., etc.

3 Responses to “Business as Usual Here...”

  1. Broken Arrow Says:

    That's good! I find myself a lot more active than ever, if only because I think a lot of people are going to hurt themselves in the end by running from all this.

    That and it's just not my nature to stand idly by and let things I don't believe in to run amok....

    But that's just me.

  2. monkeymama Says:

    & I've appreciated your voice of reason.

    I guess that's too why I decided to say something. IF people come to my blog for financial advice and wonder why I haven't said anything. It's been mostly because I don't have much to say - hehe. But maybe I should speak more about why precisely I am so calm.

  3. monkeymama Says:

    I have to add, between 2002 & 2005 our income was cut in half (though by choice) and our health insurance went up 600%, while gas prices also skyrocketed. Those were much more trying times for us, personally. Our expenses have been considerably more manageable the last 2 years, in comparison.

    & also, in California, where the tech bust hit very hard, a lot of people had barely begun to get back on their feet before all this mess. IT's really a huge double whammy for our economy. So I don't necessarily look at the last few years as great/propserous times, in many regards. Almost everyone I know had a long layoff (either husband or wife) in 2002, 2003, or 2004. The ONLY prospering this area has seen in recent years is the real estate bubble. A lot of people I know don't have emergency funds because they haven't had time to build them up since their last year off of work in say, 2004. Likewise, a LOT of the equity borrowing was due to hardship. Some of it was just survival, and a sort of delaying of the inevitable. But now the equity is gone, I think it makes this go round much more scary.

    Just to give some more of my own regional perspective.

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