Tuesday, March 18, 2008

Crazy Days

These are interesting times to be trying to blog about personal finance. It's just one thing after another in the news, from high-priced hookers to the rapid implosion of major financial firms. The stock market is all over the place, the government is trying to bribe people to go shopping, and who knows what kind of bailout they'll cook up for mortgages.

I am not enough of an economic genius to even begin to comment on most of these things. (Though it's tempting to try to tackle the expensive hooker issue.) Like most people, I suppose, I feel like a small boat on really choppy seas, wondering how best to reach the shore. How do we cope with all this? If we're having an unprecedented kind of economic turmoil, do all the old rules apply? Do I still keep plowing money into my usual blend of investments, which is heavily weighted towards stocks? It's so depressing to see your hard-earned contributions completely negated by market losses for several months in a row. Meanwhile, for safer investments, interest rates are dropping, so they don't help much either. Fortunately I think my job is fairly secure, but what if it wasn't? I know a few people who have lost jobs recently and most of them haven't landed anywhere yet. It's scary to think what could lie ahead, and how easily most people's savings could evaporate.

Then you have today's New York Times, which has a special section on "Wealth and Personal Finance." Lots of helpful stuff here: how to set up trust funds that will give your children just enough so that they don't become lazy leeches. How to manage when your wealth is spread out into lots of different accounts. How to start investing in hedge funds once you've made your millions. And tips on figuring out what kind of servants you might need and where to hire them.

Great timing, NYT! I'm sure all those Bear Stearns employees will be gobbling this info right up!


Andrew Stevens said...

Very important to realize that your contributions are not negated by market downturns. You own more shares than you did before because of your contributions. All that has been negated is the market value of those shares. Since you don't plan on selling for several more years, pay no attention to what they're selling for now.

I'm sure you know this. Now's a good time to remind yourself.

Madame X said...

Thanks Andrew-- I do try to think that way, and tell myself it's a great opportunity to be buying shares at bargain prices... but then you see companies like Bear Steans this far from bankruptcy and it's scary to think that any number of shares could become worthless! overly paranoid thinking when dealing with mutual funds, I know!

Anonymous said...

I think it's ironic and sad that one of the families profiled in the "dealing with inheritance" slideshow runs a collection agency.

"Future Millionaire" said...

Well I guess for all those loosing their jobs the NY Times says that its time for some to hire an Upstairs, Downstairs, and above the garage help. I have to agree the NY Times had a very poorly timed feature.

Anonymous said...

Holy cow. I thought you were exaggerating about the NYT article. Amazing! Now I've had a crash course on being wealthy in case it ever sneaks up on me.

Anonymous said...

Apparently the NYTimes has a better demographic than the rest of the newspapers in the country.

Frankly, there are the rich, the ruling elite (rich by default) and then there are the rest of us.

While some are worried about where to get the best hired help, the rest of us are worried about becoming the hired help.

I'm with you MadameX. I have a good job, am not overly worried about losing my job, but still feel the stress of a wavering economy. The fact that our national debt has gone beyond absurd, the dollar is at historic lows, housing is in the crapper and...... okay, I'll stop. Yeah, I think I'm with you. No wonder I love reading your blog.

Anonymous said...

On the Jewish calendar, we recently finished reading one of the books of the Torah. When you do that, you mark the event by saying,"Chazak, chazak, v'nitchazeik!" -- "Be strong, be strong, and let us strengthen each other." (Loose translation alert...)

Hang tough, everyone; don't panic, don't change a good investment strategy or a give up sensible financial behavior just because there's a (substantial) bump in the road. Things are bound to improve at some point.

Escape Brooklyn said...

Effing New York Times!

But did I read somewhere that these sorts of downward cycles rarely last more than a year? I'm going to keep doing what I'm doing with regular, automated investing and will hope for the best!

Anonymous said...

our company's 401k even doesn't have a money market. So I feel double pain when "see(ing) your hard-earned contributions completely negated by market losses for several months in a row." and I could do nothing about it but keep investing in poor performance stock and bond funds. I have suggested openly in an office email to all that we should have more fund choices. But I am not sure it would really happen as a miracle.

Anonymous said...


I'm in the same boat as you - the small boat in the choppy sea. My company is doing great, and I feel pretty secure at my job. But with the falling dollar, trying to sell a house in a down market, inflation... it's easy to get down about how things are right now.

Just going to keep paying off debt, investing, and continue in the belief that eventually everything will come around.