No one can predict very well the behavior of crowds. I view everything as probability curves. Let’s say one thinks there is a 80% chance we will crash again and a 20% chance we recover. Then the market recovers. Was that person wrong? No. The future isn’t fixed (macro-economists I find are the only ones who seem to think the future is pre-ordained). In fact, it’s impossible to separate error due to “chance” events vs. error due to faulty analysis.

It is not our job to become mini-macro-economists. We cannot be. One has to look the market in the eye, see how willing they are to actually take a chance losing money, and act accordingly.

You said yourself you’ve tried to trade markets, and found it didn’t work. Thus I assume you are investing this money for the long term. 10, 20, 30 years from now, most of us will look at this time like a blip on the radar, an episode of little or no consequence.

I went through the same process. I was thinking “do I really want to place my whole life in the hands of others who may or may not be willing to buy these stocks I have now, for a higher price later on?” or “Does “financial independence” really mean anything when it is essentially tied to the fickle mood and nature of a mob of people?

On the other, I can see this same mob is extremely cautious now. Yes, yes, stocks are up 25%. They are still lower than twelve years ago. I find that saying people are being exuberant in any shape or form is very much stretching the reality.

I took action in November and got 100% invested again. I will take no further action and have discovered I can live with the consequences should the money disappear.

The crash made me discover I can live with a feeling of abundance if I realign my values. Which doesn’t mean selling everything and calculating every possible scenario of doom, as I did back last summer.

True financial independence, I now think, is realizing if the money I have now completely disappears, I am confident in the value of my skills and my will that I can make money again.

I also agree that retirement isn’t nirvana. In fact, feeling disengaged from society and unable to contribute is what I imagine can put many seniors in depression. Retirement goals have become a psychological burden for all of us and it’s very liberating to have an “I’ll be OK” attitude. I stil think aiming to gather a million $ is a worthwhile goal. It’s very satifying to know one has enough money to have extra freedom from financial ties. But I view it more as a “gift” now than a pre-requisite for further happiness. I still think stocks will do their 7-8% over time – but I don’t think view it as “a waste” if it doesn’t happen.

It is good to stand back, observe these things and the market, but one must not get himself influenced too much by other people who, at the end, don’t know any more than we do what will happen. The world and its economy is a supremely complex machine, and even those that say inflation is a given I think are slightly arrogant and over-confident in their abilities.