Review What You Need to Do in this Economy – Good hidden in Bad Time, Bad hidden in Good Time
After witnessing much tumbling in the stock market for the past few months, the gain from last six weeks is probably making many people all warm and fuzzy.
I cannot help but feel ambivalent.
On one hand, it is nice to see the numbers going back up when I do my monthly tracking. It makes us feel like we are moving past the bottom of everything (probably not yet).
On the other hand, the problem of excess runs deep into every bones in the economy and financial system. That means to completely get rid of the ill in the system, because it is so large, must take its own time and pace.
Albeit nice to see a recovery now, if there appears to be a recovery so soon, it is most probable that the problem in the system is merely being swept under the rug for a few years — meaning a worse crash in a few years. Not a real recovery. A long bear market to shed the excess in system suddenly seems not so bad in place of a worse crash (implosion of the system) than what we have seen.
That is what I believed anyways.
As a result, I think it is really important to see how things work out this year and plan one’s investing strategy accordingly. If we do recover by the beginning of next year, a bigger crash seems imminent. And what about inflation? It almost seems like there is no place to put our money, but this only means the understanding of the market AND yourself the more important.
At this point in time, if a person truly value [long-term] financial security and personal finance, one must review carefully what is important, and therefore, what is enough in life to decide what to do and then the amount of % in cash, bond, and stock he wants to hold for the years down the road.
What do I really NEED?
What can I live on with? And without?
Does it really take a million?
Do I really need to be completely not working (AKA. retirement)? <-- 'Tis a bigger topic later. What is truly important? Happiness? Peace? Relentless excitement? What does it mean to be healthy? (medical cost) What does it mean to live? Last thing, I believe one must be careful to consider if he wants to fully risk obediently chasing after the ghost of 6-8% average gain in stock market. I thought of this when I kept reading people in their late 40s and 50s losing almost half their portfolio... if they truly had diversified, meaning not holding everything in equity, would they yet lose half their portfolio? I am thinking maybe 30% instead of half. I guess it could be the problem of some fund managers.