Wednesday, September 17, 2008

don't PANIC

Well folks we are certainly in the middle of it now.

There is no denying that the fancy financial shenanigans of the past few years have now fully culminated in the fecal matter hitting the overhead rotational device.

Bring it on is all I have to say. Let's get this over with. Me and my clients are positioned decently to weather this storm but not without a concern for the broader societal impacts.

Investment banks - done.
Sketchy lending joints - done.
Poorly capitalized banks and insurance companies - done.
Hedge funds - done.

Fortunately, life will go on without these companies and hopefully it will result in less speculative mentality and behavior. Let's focus on doing productive things like designing and building stuff that works well. Providing valuable services with pride and honesty. Supplying the world with items of real utility and value.


Montery said...

Timing is everything. I totally feel like I bought at the precise WRONG time. Two days before the crash I did. Bought ETF funds, diversified around the globe I did. Down 20% they are.

Ah well, it's just money. And I didn't invest ALL of it across the board.

Outside of the RRSP, I've bought some Barclay's bank because I'm fairly certain that, in the long run, they are robust, and will continue to pay decent dividends. I've also bought some pipeline stock in Canada. Oil must flow, so, invest now.

Back in the RRSP, I've also kept a sizable percentage in money market and a fractional percentage in other mutual funds (Latin America, Precious Metals (yikes) and a few other areas)... basically everything is down down down.

Just my MSFT, BNS, and ACN are up -- stuff that I bought ages and ages ago. Proof that if you hold out for the long term, you'll do well, no matter what the current turmoil in the markets are doing.

What about the rest of you? What are you investing in? I'm thinking a Gold ETF, but I think I missed the boat there... any defensive hedges? I'm continuing to buy into the market to dollar cost average down. So we'll see what happens, I guess!

M- said...

My money's all in GICs, spread around multiple banks and credit unions, all kept under CDIC/CUDIC limits. I took my money out of the markets in Sept and Oct of 2007.

At the time, I even took my money out of the money markets (that was shortly after the Conventree ABCP thing happened-- who knows what the next crisis will be? Some money market funds in the UK and then the US pushed losses onto investors, and limited withdrawals. I want no part in that.

My wife and I work solid jobs, and we continue to sock money away as quick as we can.

My only risky item is that I trade FX, but I'm doing well at that-- after 2.5 years, my FX account is 2.5x where it was when I started. I just wish I put more money into it initially!

patriotz said...

Just my MSFT, BNS, and ACN are up -- stuff that I bought ages and ages ago. Proof that if you hold out for the long term, you'll do well

No, it's proof that if you buy for a reasonable price and hold out for the long term, you'll do well.

If you buy something for a ridiculous price, like Nortel in 2000 or Vancouver RE in 2007, you will never come out ahead.

mohican said...

Nortel hit a 25 year low in its share price yesterday so it is a good example of a seemingly good investment idea gone very very wrong.

My general advice is to stay diversified, really diversified and have a higher allocation to fixed income than you normally might have. I think there is a good argument for averaging into this market starting now over a 12 to 18 month period.

mk-kids said...

Mohican, I almost spit my mint tea out my nose when I saw today's pic! LMAO!

Hubby & I have cashed out some stocks at the top, then bought in again at half but now they are worth half again! We've invested a touch more to average down our dollar cost but we are still losing a bit o' the green right now. We're confident these companies are solid and have a proftitable future in store so we're okay to hold long-term. Mostly all our cash is in high interest banks accounts though.

Paul said...

LMAO! Thats was awesome.

No one is safe from this mess. At the best we can ride out the next couple years without losses.

VanTOVan said...

I'm 90% liquid right now. Starting to nibble away at equities, but it's taking some courage. All those platitudes about buying when there's blood in the streets don't give me comfort when I sense that the elevators from the Overlook Hotel are going to open up and decimate us...

markoz said...

Just woke up this morning and clicked on the BBC news link to discover that the US government will be buying somewhere between 1 and 2 trillion dollars worth of bad debt from US banks. I am simply staggered. The taxpayer will be bailing out the big banks. I have no words...

mohican said...

There will be two major losers in the proposed deal to buy up junky debt:
1) US Taxpayers - what else is new
2) US Dollar - there is no way this amount of debt can be taken on by the US Gov and it not negatively affect the US dollar at some point

Montery said...

Soo... I shouldn't be buying US dollars to fund the purchase of my US stocks?

This whole mess has simply highlighted the fact that diversification is a bit of a joke. Diversification has as it's basis the assumption that the economies of the globe are not tightly coupled. Clearly, this is a lie. The degree to which they are coupled is in question. If there is a economic meltdown, you can expect the rest of the globe to get singed to one degree or another.

I'm convinced that diversification only buys you a slightly shallower loss or gain, not insulation from contagion.

Sorry, just ranting a bit. :)

The good news however, is that, as of today, it appears this was a buying opportunity. I just hope it's not a bear trap on the way down!

Dave said...

montery, I don't think anybody knows where the market is going. I don't think today is a good bellweather because the SEC disallowed short selling and created a 'short squeeze' situation in which people are forced to buy. I don't think there has been enough time for people to accurately assess all the new information.

Panamericana said...

King Paulson: