Why I'm not Panicking
Seems like an opportune time to post this. (Under 9000!)
So, on paper I've lost a bunch of money this week, as I have a good amount socked away in total stock market mutual funds. Yeah, the numbers are depressing. But. Those are long-term investment; that's what stocks should be, unless you're a day-trader, in which case I think you have to be slightly nuts but more power to you if you can pull it off without going insane. But for most people, you shouldn't have money you might need right now in stocks, for precisely this reason. Barring emergencies, I'm not planning to *use* those stocks for decades, and if the market hasn't gone back up by then we'll be living Mad Max style and bank accounts won't matter much anyway. Honestly, I'm getting more and more tempted to buy stocks, because they're relatively cheap right now. Of course, who knows where the bottom will be; if I could time the market reliably I'd already be rich.
Second big worry is the job market sucking, but as I just posted in a comment elsewhere:
Fortunately, a lot of [my company's] incoming revenue comes indirectly from government funding for homeland security, which is sure to be one of the *last* things on the chopping block in the current environment. And while police departments can certainly run low on money, they're pretty far removed from whatever happens to be going on on Wall Street at a particular moment. We actually have more orders set to come in in the next two months than the previous six or more.
Of course, not much VC money will be flowing right now, but we never managed to get any of that anyway. So basically, we're just as badly off as we've been for the last eight years.
So yeah, not panicking. However, this doesn't diminish my empathy for anyone who's:
- Trying to retire right now (though hopefully you'd have already shifted a good portion of investments to bonds and can let remaining stocks ride for at least a while...)
- Trying to get a job right now, or
- Needing some credit right now.
Wall Street bankers may have their world crumbling on general principle, but those three points are the things that are actually going to hurt most people due to the meltdown. My sympathies to everyone facing them.
That said, the "omg end of capitalism" talk is also a bit premature. This wasn't an inevitable result of *any* sort of capitalism; this came from letting brokers get away with transactions that were blatantly loony and then massage them until everyone was convinced it would all work out somehow. There's no fundamental reason why we can't get back on our feet and try again, only with a little more sanity this time plz thx. The only trick is having regulators remember in *another* 10 years to maintain a little more skepticism in the face of completely crazy financial tricks. Not that I'll be holding my breath.
So, on paper I've lost a bunch of money this week, as I have a good amount socked away in total stock market mutual funds. Yeah, the numbers are depressing. But. Those are long-term investment; that's what stocks should be, unless you're a day-trader, in which case I think you have to be slightly nuts but more power to you if you can pull it off without going insane. But for most people, you shouldn't have money you might need right now in stocks, for precisely this reason. Barring emergencies, I'm not planning to *use* those stocks for decades, and if the market hasn't gone back up by then we'll be living Mad Max style and bank accounts won't matter much anyway. Honestly, I'm getting more and more tempted to buy stocks, because they're relatively cheap right now. Of course, who knows where the bottom will be; if I could time the market reliably I'd already be rich.
Second big worry is the job market sucking, but as I just posted in a comment elsewhere:
Fortunately, a lot of [my company's] incoming revenue comes indirectly from government funding for homeland security, which is sure to be one of the *last* things on the chopping block in the current environment. And while police departments can certainly run low on money, they're pretty far removed from whatever happens to be going on on Wall Street at a particular moment. We actually have more orders set to come in in the next two months than the previous six or more.
Of course, not much VC money will be flowing right now, but we never managed to get any of that anyway. So basically, we're just as badly off as we've been for the last eight years.
So yeah, not panicking. However, this doesn't diminish my empathy for anyone who's:
- Trying to retire right now (though hopefully you'd have already shifted a good portion of investments to bonds and can let remaining stocks ride for at least a while...)
- Trying to get a job right now, or
- Needing some credit right now.
Wall Street bankers may have their world crumbling on general principle, but those three points are the things that are actually going to hurt most people due to the meltdown. My sympathies to everyone facing them.
That said, the "omg end of capitalism" talk is also a bit premature. This wasn't an inevitable result of *any* sort of capitalism; this came from letting brokers get away with transactions that were blatantly loony and then massage them until everyone was convinced it would all work out somehow. There's no fundamental reason why we can't get back on our feet and try again, only with a little more sanity this time plz thx. The only trick is having regulators remember in *another* 10 years to maintain a little more skepticism in the face of completely crazy financial tricks. Not that I'll be holding my breath.