Everything Is Backwards, But We Can Endure

PhoneThe picture is of the little screen on the front of my wife’s cell phone and the readout it backwards. I have no idea what caused it to read that way and like any other gadget it fixed itself by turning it off, waiting a few minutes and turning it back on.

The timing of this is uncanny (I can’t make this stuff up folks). It is a pretty good anecdote for how backwards everything in the financial markets and for that matter the world is these days.

Before I get into what I had in mind for this post is something Barry Ritholtz came across about whether or not Rick Santelli’s infamous Chicago Tea Party rant was spontaneous. In addition to reading what Barry excerpted check out the comments too. I have no idea how true or not any of the story is but the willingness (by MSM and the people reading Barry’s site) to explore or accept the possibility of a conspiracy is striking. While the story is entertaining I don’t tend to gravitate to conspiracies despite my living in a small cabin in the woods in the mountain time zone.

Some of the comments here on Random Roger this past week have relayed some pretty bad stories about some people who have had some real financial bad luck in the last fill in whatever time period makes sense. A few days ago I mentioned that the psychological damage inflicted on a move down to SPX 600 would be worse than the financial damage, the implication being that point wise most of the decline has already occurred but the the investing public’s psyche is in a fragile state right now, very fragile. When you read about someone getting wiped out, foreclosed upon or losing their job you might feel a moment of sadness for that person. The more stories you hear the more time you spend being sad for a moment and at some point there is a cumulative effect that could really weigh you down.

There is already a cumulative effect on all of us from the decline (the word decline doesn’t really capture all the facets but it will suffice for now). Collectively we are less confident about what the stock market can do for us and less confident in our ability to navigate relative to the market. With all the failures, frauds and fixings we are collectively rattled. This increases the chances we do something that ends up making the situation worse (someone will, after having ridden a fully invested portfolio all the way down, throw in the towel for good at the absolute bottom).

I believe I can tie some of my quirky posts about lifestyle and balance into this discussion. Anyone prone to emotion who fixates on the markets and economy is headed for trouble if they are not already there. Even Roubini doesn’t think it is the end of the world; he made a case for things starting to turn up in 2010. Are you amazed that this decade, the oughts, is almost over? Do you wonder how it went by so fast–this decade? Well then a bad 2008, 2009 and even 2010 will pass in a blink.

This can be much easier to endure if you have other interests and maintain a healthy balance. For me this includes exercise, a reasonably healthy diet (no soda!), volunteer work and a dog. In all likelihood this is not the end of the financial world just a really bad decade or so for markets, bad enough to alter future expectations about what kind of lifestyle people should expect or what their portfolios can do for them when they retire. If you are truly worried about the capital markets funding your retirement then you need to proactively figure something as opposed to sitting back and just letting it (however you define it) happen to you.

About Roger Nusbaum 169 Articles

Roger Nusbaum is an Arizona-based financial advisor who builds and manages client portfolios using a mix of individual stocks and ETFs. Roger writes a popular blog, which focuses on risk management, foreign stocks, exchange traded funds, options etc.

Roger has been recognized by many in the investment management industry for his expertise in portfolio management. Roger has been regularly interviewed by the financial press, trade journals, and television news shows. He has also had numerous technical articles published and has been quoted in a number of professional trade journals, newspapers, and consumer finance magazines. He appears frequently on CNBC Asia as a market commentator.

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