Everybody Loves Your Money

Here’s an interesting article that talks a bit about the current financial state of America but also looks at the ongoing strategy of spreading capitalism around the world.  I have to agree with this guy.  I think it’s time we all look inward both at a personal level, by living below our means, and as a country by starting to look inward to increase domestic production of goods and services and by working to bring our imports down and our exports up.  We can only sustain a trade deficit and massive budget deficit for so long.  At some point we have to recognize that it’s time to get our own books in order.

http://www.bu.edu/today/campus-life/2008/10/07/end-america

Anyway, you can certainly disagree with me but I think most of us agree on at least the fact that we should all practice some fiscal conservatism by living below our means and buying only the things that we can truly afford.  I particularly liked the quote:

The American economy has since become import- and credit-driven, he said, drawing on outside forces to support an increasingly consumeristic lifestyle. Bacevich said that he felt this distinct shift in values when Black Friday, the first day of the holiday shopping season, became a prime indicator of economic health rather than exports and savings accounts.

and

“We need to live within our means, as individuals in our households and in terms of the services provided for by government at various levels,” he answered. “I’m no economist, but I do believe there is no free lunch. Everything has to be paid for.”

From the beginning of my investment career I have always thought that if you weren’t in stock with all your money then you were probably missing out on some returns.  That was especially true as I watched the dot com era and then the latest run up in stock prices.  While I did keep most of my investments in index funds, I have always had a few stocks in my overall portfolio.  Being "all in" in the stock market just always seemed like the right approach.

A couple years ago I was having a conversation with a friend of mine.  He is very investment savvy and has been investing almost as long as I’ve been alive.  I call him my personal Warren Buffet because he is very much a "value investor".  He’s given me more than a few good tips over the years but more importantly he has helped me change my thinking on investing.  Until I met him I was guilty of being a follower and trying to chase the latest hot stocks or segments of the market.  He has been anticipating a significant buying opportunity in the market for at least the last 3 years.  He believes that a good buying opportunity might come around every 8 to 10 years and with all the hype over the last few years, he felt it was about time.  He sure was right.

I hadn’t talked to him for a couple months when I called him late last week.  I wanted to get his take on the recent market turmoil and see what he was doing.  I can’t say I was surprised to hear the pleasure in his voice as he described some of the stocks that were very much on sale.  He had been buying all week and I’m sure that buying continued this week.  I have no doubt that he’ll do well as the market bumps around.

The number one thing that I have thanked him for, was giving me the advice to keep a percentage of my investments in a cash account (like a money market acct etc).  Because I listened to his advice a couple years ago I’m finding myself in the position to buy a few investments at prices I wouldn’t have imagined even a few months ago.  My only conflict is when I think the prices will near their bottom.