I am slowly beginning to get a 9/11 view of the financial system.
After 9/11, I adopted the attitude that No News Was Good News. There was so much bad news going on, so many people saying that the world was effectively ending, that the constant drumbeat of doom and devastation began to get to me. I couldn't escape it unless I stopped listening -- so I stopped. No daily paper. No Sunday paper. No radio commentary programs. After a while, I thought it was safe to resume, but found that they were still out there, so I dropped out again, for a couple of months, by which time, things had become less frantic.
That's how I'm beginning to feel about the financial system. I haven't been paying a lot of attention to the news because we're in a decent position, with no debt over a month old of any kind, and a goodly amount of assets. Though I know that things are not good, I tend to feel that they're not good for other people. Things could still go south for us, and quickly, if my wife lost her job, but even there, I tended to think that we'd be okay. Not great, but okay.
But some of that qualified optimism comes from deliberate blindness to reality. Every so often, I get the urge to look at how our investments are doing, but I don't do it -- I looked about two months ago, and found that they were down by about twenty percent. Wow, that's pretty bad, I thought. Now I hear that that's nothing -- losses of thirty and forty percent are common, and even more not out of the question. That makes me shiver. Even though I know that so long as the market recovers, we'll be okay, losing only (only!) the interest and dividends that those investments would have earned in the interim, it still makes me nervous. More than that, it makes me wonder how nervous should I be?
Well, looking at a Business Week article today, the answer was: Oh, very nervous, and for at least the next six years, too. OMG. If that's true, and if it means a continued substantial reduction in assets, what does that mean for me? What ought we to be doing? And I really don't know. I don't even have a clue. We have Social Security in our future -- will it be there? We have pensions from our jobs -- will the funds still be there? What if my mother needs assisted living? What if.... Oh, man.
Long term plan? I'm getting ready to kick an ostrich aside so that I can take over that hole in the sand. And for a while -- I'm just not going to pay attention to what's happening. Possibly for a long while.
4 comments:
Join the club.
You mean, it's not just me? My golly.
Trouble is, they always tell you there is "some" risk. They ask you about your "risk tolerance", when they really mean, are you prepared to lose the whole thing?
I used to gamble...not really big...but the pot was sometimes pretty hot. That was a high risk investment...not a lot goes into it, and the payout if everything goes well is huge. A low risk investment would be the guy buying the beer for that tavern we were playing in. He lost the whole thing in a fire one day, but aside from that unlikey event, his investment in beer paid off with great regularity. The beer was not a volatile investment.
Volatile is a funny word. According to the dictionary, liquids are volatile if they evaporate quickly. As applied to monetary funds, it is "bank speak" for "the value of your investments has just evaporated".
I am certain that there is a difference between a volatile investment and the pot of cash in the middle of the poker table. A risky investment is not necessarily more volatile than a non-risky investment. The pot will not evaporate like a puddle of spilled gasoline in the sun, but the investment, well, that can evaporate pretty quick!
Maybe I should have stuck to poker. And beer.
I just want to hear a stock-pusher say just once that 'this is a good time to sell'. Just once.
Post a Comment