building wealth in an age of thieves

aig

I’m sure that if you’re an investor in AIG this morning you aren’t too happy. Or maybe you are.  You can call up your friends who invested in Lehman or Bear Stearns, I guess.  There’s certainly a clear implication from the recent news – if you rely on being an employee or an investor in the stock market as a route to wealth you have some sneaky obstacles to overcome.

This age of thieves – stealing from individual investors in the name of “stability,” using money sucked from the pockets of taxpayers – makes me believe more and more that the only real hope for wealth building in this country will be through one of three paths:  creating a business, creating creative content, and real estate (and that’s questionable).  Investing in individual stocks has become a fool’s game until regulations reestablish the need for transparency.  A market where the government has become a major institutional player is no free market anymore. Being an employee of one of these ridiculous companies is no sure bet, either.

Times are changing. Bubelah and I worry a lot that even though we’re relatively young we are inadequately diversified for the future.  I remain in the market, and I continue to contribute to retirement plans, but I have yet to hear one satisfying argument why putting the rest of my savings into cash right now isn’t a good idea.  Maybe that cash will go to a business idea, or a real estate purchase, or even just to peace of mind in the event of a financial services consulting drought.  But it is clear to me that the old paradigm of “just invest in the market and ride the ups and downs” may not be applicable anymore.  When bank regulators start buying insurance companies, anything becomes possible.  Maybe HUD will buy Boeing next.

I will wait and watch like the rest of America as the system grows more and more perverted, and more and more individual shareholders are wiped out in favor of “system stability” and protection of corporate loans.  The WPE cruises off and we remain to reap the whirlwind.  Good times.

Yet at the same time, the basic principles remain: invest in index funds.  Live below your means.  Save until you have an adequate emergency fund.  Make sure your insurance (!!) is adequate and up-to-date.  Eat, drink and be happy.

photo credit: TheTruthAboutMortgage.com