Thursday, October 9, 2008

How To Go On Vacation

In February (2008) after six months of watching the financial markets, I began to warn my family and friends about a coming downdraft in the markets. The decline in real estate and banks had already begun but I held my tongue until I knew I would feel guilty if I didn’t speak out and let them know that it was only a small precursor to what seemed inevitable.

After I began my warnings, I learned that I was going to need some major surgery – under the knife for 5 hours and out for 8. So I called my broker and said, “I really don’t need to be worried about this kind of market with surgery and recovery and the like going on. So put me into cash.” “You mean sell everything?” “Yup. Everything” “We’ll put it into our money market fund at 2.5%.” “No, I would feel better if we just put it into greenbacks. I don’t know how your money market fund makes its interest and I don’t have time to find out.” “OK, how about we just send you a check?” “Great! A check would work.” And so, my good friend at Lehman Brothers sent me a check, which I spread around to a few sound banks.

The surgery was successful. But about that time a brigade of geniuses armed with Band-Aids to apply to the jugular of the financial system, which was spurting and gushing its life’s blood in the streets, rushed on to the scene, like the Keystone Kops, eliminating any possibility that I would even think about investing in equities until the panic was over. So I just sat on it.

Possibly spooked by the surgery, my wonderful spouse was ready with an alternative to preoccupation with markets and the like. She took the opportunity of my semi-retirement from the corporate world of 12 hour days and truncated vacations to force me into weeks at the lake, extended tours, class reunions, weeks of visiting the children and grandchildren, and holidays at the relatives’. We are having a worry-free time but are scheduled to be home less than half of the remainder of the year. And I have committed that remaining time to my former employer and a few clients. How in the world will I find time to evaluate markets and companies in which to invest that cash?

Well, maybe it’s not so bad after all. The Dow closed today at 8,579.19, a nasty drop from February and 40% below last year’s all-time high. But yesterday, one of the financial newsletters suggested that a short term bottom is near, calling it a “dead bull bounce,” which I guess goes up a bit higher than a dead cat bounce. Short term bounces still don’t sound good. I guess I’ll keep my powder dry until January and have a Merry Christmas and a Happy New Year.

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