Unless you’ve been living under a rock for the past two weeks, you’ve probably heard about the stock market falling, the Big Bailout, banks crashing and the dozens of financial guys on the TV crying foul and no fair and this is all someone else’s fault and the sky is going to fall at any minute so quick run and hide and take all your cash with you. AAAAAAACK!
Okay, let’s everyone stop and take a couple of deep cleansing breaths, okay? I’ll wait.
There. Feel better now?
I’ve talked to three different people over the past week or so about what’s going on and they’ve all said “You should blog about that.” So, here goes. I sincerely hope this is helpful to some of you.
First of all, let me just state for the record: I AM NOT A CERTIFIED FINANCIAL PLANNER OR A CERTIFIED PUBLIC ACCOUNTANT AND I’M NOT GIVING FINANCIAL ADVICE TO ANYONE FOR ANYTHING FOR ANY REASON AND THIS INCLUDES YOU. IF YOU HAVE QUESTIONS ABOUT YOUR PERSONAL FINANCIAL SITUATION YOU SHOULD CALL YOUR PERSONAL FINANCE PERSON. (Incidentally, if you don’t have a finance person, you should get one. Even if you think you have no money. But, that’s a blog for another day if anyone wants to hear it.)
What I am is a person who has a degree in Accounting and Finance and has been studying personal investing since before she had two pennies to rub together. My goal has always been to not be a bag lady when I’m old. Period. That’s it. Along the way, I’ve learned a thing or two from reading lots of books and magazines and from trying things with my own money. I’m happy to share what I know, but see big capital letters above. I’m not an investing guru, nor do I want to be. What I’m going to tell you is my personal opinion based on what I know about investing, the situation, and what my friends who are stock brokers and financial planners have told me over the past few weeks.
Okay, kiddies, here we go. As my title says, should you panic about the current situation in the financial markets? The answer is: NO.
For one thing, panic never serves you well. If you’re panicking, you’re not thinking or listening to what’s going on around you. Which means there’s no way you’re going to be able to formulate a strategy. Strategies are good things. They are our friends.
Secondly, the pundits and TV financial guys are Drama Queens. Really. Their job is to keep you glued to the TV scared to death the sky is falling, and watching all their commercials so they keep getting paid the big bucks. Cynical? Probably.
Third, when Maria Bartiromo (whom I love) is interviewing some guy on the floor of the stock exchange, she’s talking to a Trader. A Trader is someone who bets hundreds of thousands of dollars a day on whether a particular stock or group of stocks, etc, will go up or down. Neither you nor I are Traders, we are Investors. Traders are the hares of the financial world. You and I are the turtles. People who put in a little bit of money every month, inching our way toward retirement so we can maintain the lifestyle we currently have once we retire and not be little old ladies eating dog food for breakfast. We aren’t looking to make this year’s salary on today’s movement of the stock market. Trader’s are.
So, what does this mean for your 401(k)s and IRAs, and mutual funds, etc? Well, honestly, if you’re going to need that cash in the next 3-5 years, and you’re only in stocks, you probably want to move your money to treasury notes or bills, ie. Cash. If you don’t know what treasury notes or bills are, google them. But, basically, they are investments that aren’t going to pay you a lot of money as far as interest, but they aren’t going to lose money either. They are backed by the full faith and credit of the US government. And, yes, my lovelies, the government is still stable.
If you don’t need that money for 3-5 years, then if I were you, I’d not only leave it alone, I’d put more money in. That’s what I’m doing. What’s that you say? But, Auntie Chelle! All those really smart guys on the TV box are saying my money and everything I’ve worked to save is going to be gone! Kaput, Zilch, Zero!
Again, we’re all Investors here, not Traders. Yes, the stock market is in the toilet. We’ve gone from somewhere around a high of 14,000 points for the DOW to the current low of 8,000ish points (trading hasn’t opened as I’m writing this) and that’s a pretty darn steep slide (If you don’t know what the DOW is, google it or ask me in the comments.). Hey, no question, things suck eggs right now. But, here’s the thing practically no one is talking about: there’s a lot of really really really good stable stocks that are On Sale because of that slide. If you’re like me and you love to find the deal hidden on the sale racks in the back of Macy’s, this is your chance. Companies that have been around for decades are down over half of what they were trading for a year ago. GE, for example. I would bet that there’s not one of you that doesn’t have something made by GE or financed by GE in your house or business right now. They are a stable company and they aren’t going anywhere. Are they affected by this stock market/credit market thing? You betcha. But, given time, they’re going to be fine. They are well diversified among almost every economic sector there is (imho). Which means they are a DEAL right now (imho). And they pay dividends. Which, in Auntie Chelle’s book is Free Money. And we all know that FREE is my favorite F-word!
So, if you are contributing to your retirement plan and you aren’t going to need that money for 5 years, keep on doing what you’re doing. If you have to, just don’t open your quarterly statements when you get them in the mail. File them away until this is over. Stop watching CNBC, FOX, CNN, MSNBC, etc. Yes, the situation is bad and governments need to do something and they are (finally). But, there’s nothing you can do but wait for the situation to correct itself and try to find the bargains that are out there.
I hope this is helpful. I tried not to get too much into the details of why this happened because if feels like that poor horse has been beat to death. If anyone has any questions, leave them in the comments and I’ll do my best to answer them.
So, should you panic? No. Never a good idea. Should you be concerned? Well, sure. This is a bad sitch and it’s going to cause a lot more bumps in the economy before it’s over. But, one thing that’s missing right now is hope and optimism. I’m not talking about rosey glasses skipping through the forest gathering daisies hope and optimism. I’m talking about the kind of hope and optimism we all need to get out of bed in the morning, brush our teeth and get our kids off to school and ourselves off to work. We’re all in this together and we as women, mom’s, American’s and Citizen’s of the freaking World are strong and capable and tenacious. It’s not going to be fun to pull ourselves out of this, but it can be done.
And that’s my two cents. See above capital letters. Don’t go putting all your money in your mattress and don’t stop contributing to you
r 401(k)/IRA/etc. Anything you buy today is going to be super cheap and will help increase your money as we pull out of this. (I SO want to talk about dollar-cost averaging and about a half dozen other topics, but I’ll restrain myself. Thank you, Beki.).
P.S., if I dissed any guys reading this with the whole we’re moms we can do anything comment above, I apologize. I wasn’t aware you were here!
Bunches of hugs,
Auntie Chelle