I try not to.
Even though I’m following the markets pretty closely thanks to NPR and WSJ (and The Daily Show), I try not to let all the headlines of “Markets Plummet!” or “The Next Depression?” or “Stocks Plunge With No End in Sight!” unnerve me (too much).
I do know that my account balances are down around 15%-16%. Not a huge change in absolute dollars, but certainly in percentage terms. Come January 2009, though, I’ll be back in the market with the first installment of Roth IRA contributions. Can’t say I don’t have faith!
Since the financial crisis started over a year ago, I’ve developed a cursory understanding of various financial instruments from reading all the news. Below are just some of the terms I’ve learned, thanks to the impeding global recession:
- Commercial paper (very short-term debt that businesses issue to fund their day-to-day operations)
- Credit swaps (a type of derivative where two cash streams are exchanged, designed to reduce risk – oh, the irony).
- CFOs (collateralized fund obligations, or securities backed by hedge funds and fund of funds)
- CMO squared (collateralized mortgage obligations backed by more CMOs)
- Credit crisis (the phenomena of frozen liquidity, spreading insolvency, and panicked selling before the End of Days)
The more I know, the more I know that I still only know about 1% of 1% of what I really need to know to understand all this, but even the experts don’t seem to be that in control… so, I guess I should be worried!
My obsession with following every detail of the crisis (those enabling media outlets!) doesn’t do one thing for my portfolio performance, and I’m not changing any positions because I’m not touching my retirement money for a long time. But, following all the drum beat of bad news is kind of like watching a burning building, in slow motion. It’s such a disaster that it’s difficult NOT to stop and watch. Right when the firefighters (with a $700 billion water hose) seem to have the garage contained, the roof bursts into flames.
Given the way things are going, who knows where the market will be in three months. But, perhaps we are near capitulation, or is that wishful thinking?
Readers, care to take a guess on where the Dow Jones will be come January 2009?
Do I have a 10,000? 9,000? 7,000?
Related posts:
If you liked the last couple of weeks, just wait until the earnings reports finish.
Dow 8500.
Great post. I have also been learning a lot from the markets – a few of those in my dept. who don’t follow them as closely as I do always ask me about what is currently going on.
Dow @ 9K (I think it’ll take a while for it to return. But hopefully not more than a year or so!)
Yeah, I’ve stopped checking my stocks and my 401k but I still check my IRA every so often just to confirm that it’s still dropping like a rock.
January Dow = 8250
Nope… I don’t even bother any more.
I’m also learning a lot from this crisis, but I’m learning the most by watching which of my stocks get hit hardest, and when. My foreign ETFs really just got hit hard, and it’s interesting watching them over time. It’s painful to see I’ve lost over $5000 from my relatively small overall investment, but it’s a learning experience.
I think it will take a few years to dig out of this mess. I wish I knew when the market was at rock bottom to pour the rest of my funds into my ROTH IRA for this year, but I think I’ll just have to hold my breath and be satisfied with dollar cost averaging.
I don’t even want to guess!
I check my accounts for my net worth update at the end of the month….and that’s it!
Yes, I check my balance…But I’m closer to retirement age – or at least I was. Ouch…
Dow at 7700 by next year at this time.
Hope I’m wrong.
But when all this money they are throwing at it and now the interest rate cut doesn’t seem to move it up, that isn’t a good sign.
I’m down over 30% since January 1st.
My IRA is in negative territory. Meaning, I’ve maxed it since 2004 (18K in contributions) and it’s worth a few thousand less than that now. So, my earnings are all gone AND about a year’s worth of contributions are gone too.
Interesting thing – my European & BRIC funds got sacked the hardest.
When so much of the world is tied to the US economy, and so much moves in tandem, is it really possible to diversify?
I cannot look daily anymore, it gets me too stressed out!
After today I would like to revise my DOW prediction – 5000 anyone?
Oh man, I wish I could stop seeing the balance of my IRA, but it’s right below my checking and savings display on my online banking and unfortunately, I seem to be a glutton for punishment, so I always look at it. My poor little IRA is down about 35% at the moment, but I just have to keep reminding myself that it’s a LONG term investment. Ugh.
If it weren’t an election year, then maybe more would get done before January. As it sits now, we have a lame duck president, a congress more concerned with elections than economic crisis, and our leader Paulson doesn’t even want to be around in the new administration.
Because no one is willing to go to bat right now, I expect that things will only get worse — DJ 6000.
But that doesn’t mean I have a gloomy outlook — I actually believe that no matter WHO the next president is, January 2010 we will be doing fine because we will have a Treasury that is invested in the longterm, a Congress that has nothing to lose, and a president that is in the frame of mind to “prove” his economic mettle. Actually, in a way I am happy this meltdown happened before the election — it means both guys have to promise to fix it instead of just whining about the “previous reckless administration”. And hopefully the new president can bring in some financial advisors that are really qualified to deal with exactly this type of financial situation.
January 2010, the DJA will be 11,000