…that we are at the end of all things, and the scary things that go bump in the night are coming. In that post six months ago I imagined that zombies would be running rampant in the streets and Drusilla would be fluttering around creeping people out with her singsong voice as the US crumbled into ruins due to the accelerating market crash. At the time, I thought we were near the bottom and that any idea to yank money out of the market was foolish.
Since then Bear Stearns, Fannie Mae, Freddie Mac, Countrywide, IndyMac and others have made me realize that zombies are running rampant in the streets, with scary names like Hank and George and Ben. Despite nominal lip service to “free markets” and “balanced budgets”, the US is certainly not above throwing the public’s money into private institutions wildly. They are stumbling over their own feet to throw money at the banks and lenders like a zombie trying to get at fresh brains. And that’s where the current situation gets a bit stickier.
As long as the market was fluctuating on its own, I was calm. I knew that the birth and death of entire industries have occurred in the US without any serious long-term repercussions. Look at the train companies – once they practically ruled America, until the automobile came along. Yahoo ruled search until Ask Jeeves came along (you thought I was going to mention Google, didn’t you)? A shake-out in the financial services industry or investment bank industry was just that – a shake-out. I was wary, but overall I was not concerned.
The stakes have become higher now. Much higher. With an expectation of public bail-outs thanks to the fiscal-conservatives-in-name-only who hand out public money faster than Lenin after a fifth of vodka, a dangerous precedent has been established in the minds of (a) Wall Street and (b) the public. Right now, the public (which includes me, to be honest) expects that the government won’t let any institutions which are “really important” fail. So what will happen if Washington Mutual fails? Or Citigroup? And more importantly, what will happen to the market when one of them fails and the government finally admits it has no more resources to prop up dying banks? Zombies in the streets, cats and dogs living together – chaos.
So how to invest, here beyond the end of all things? Well, if you have the money, keep pumping it into the market, but throw more weight into overseas equities. Unless you have a knack for real estate (and I don’t) or a business to pump your cash into, you are best off continuing to hew to your investing strategy. Don’t sit on too much cash, but don’t go cavorting around without at least some sort of cash backup. I know many people will be counting on the next president to work wonders, but it’s not going to happen. As the government continues to violate every single financial commandment (spend less than you earn, pay down debt, pay yourself first, etc.) you need to grit your teeth and forge forward to protect your financial future. It’s hard to believe that Uncle Sam’s going to have many pennies left in the jar after the next few years.
But it’s important to remember, as it always is, that your financials goals are your financial goals. Do not let apocalyptic market news worry you. That may be easier said than done, but you have to do it. Set your wealth-building strategy and stick to it. Find a supportive group of like-minded people to support you in achieving those goals. Turn off the news and attend to your family, your friends and your work. Focus on what you can control and you’ll be much happier. And buy some zombie repellent just in case.