Rampant Fear in the Market

So the Congress and the President passed the bail out bill after all. Remember my prediction? I’m goooooooooood. Naw, just kidding. I could just as well be wrong.

So after the news hit the wall, surprisingly… or not so surprisingly, the market went DOWN. What the heck? Does that even make sense?

“We really really need this bail out bill!”
“Please pass the bail out bill to save our investment!”
“Well, here you go…”
“Shit, wait! Maybe we don’t really want this. Oh shit…”
“I think we are screwed either way.”

Actually, it does. There is always one thing that drives the stock market and that contributes very much to the short-term volatility — human emotions. And the way the market has been moving lately, it shows one strong feeling that everyone has — fear. Fear of an unknown but tragic future. The analogy I will draw is… sheeps!

What we have now is a herd of sheep that is completely frightened by a thunder that they think is coming and is stampeding. They are trying to run away but there really is no where to run. Though a herder can try to stop them, which is the government tries to do with the bail out bill, it will have small immediate effect. We will have to give some time and effort for the fear to subside and the herd to calm down. During the stampede, some of the sheeps died. Some have gotten injured. The stronger ones are just fine. Those end up with wounds will take time to heal. The stronger ones will thrive. This is no different than our market and economy.

Heck, part of this strong fear could be intentionally amplified by the stronger ones for their own benefit — to be able to buy things on bargains — like big sheeps eating small sheeps. On second thought, this sounds quite atrocious, but it is how it is.

So far, I am still sticking with my strategy with buy and hold and have not sold anything out of fear. In fact, I have been putting hundreds here and there into my Vanguard funds.

Here is the way I see it.

Yes, there is a worse scenario that the market will tank for a long time. But in that case, it will still recover in the long run. No, it is not fun to watch my portfolio dives. However, I am patient and during that time, I will just worry about feeding myself and my future family. Maybe just myself, haha. I will also try to grow my capacity, which includes saving up to await opportunity. Time is on my side as I am 25.

Yep, there is the worst scenario where the U.S. market completely collapses, U.S. dollars become worthless, and I will have lost everything. Civil war or revolution of some sort may happen in the U.S. But in this case, I really have way more serious problem to deal with. Like fighting for food and water, staying alive, or getting the heck out of the country.

Now lastly, there is the not-so-bad scenario where the market will recover in a year or two or three… and runs its cycle like it has in the past. And this scenario, my friends, is what I am betting on.

Fear? Yes, I have it too. I just don’t let my emotions drive me. My awareness allows my perception and logic be the driver.

Here is how I always try to act:

  • Observe situation *simply*
  • Evaluate possible scenarios (best case, worst case, the most probable case)
  • Make decision to the best of my ability (a bet? that’s why life is a gamble)
  • Face and observe the consequence *simply*
  • Go back to step one

Originally posted 2008-10-03 14:21:54. Republished by Blog Post Promoter

Debt and Conspicuous Consumption Speak Fundamental Problem

2007111850020101.jpgDebt and conspicuous consumption are symptoms of a much fundamental problem.

The subprime crisis, consumer debt issue, and negative national saving rate don’t happen together out of sheer chance like giving birth to triplets. They demonstrate the change in people’s values and perception from past decades. What is the difference?

It is a fact that life can be a bitch and some are very unfortunate to be much handicapped to begin with. However, it is also a fact that they are the minority of the population who have no choice being in poverty. Here today, let’s focus on the majority of the population who has the luxury of the freedom to choose.

At the end of the day, people deep down know what they need to do for themselves regarding their finance, but somehow somewhere along the timeline, people stop admitting to reality and ignore what they know. They prefer to be denial, and may even do their best to stay in ignorance, so they can justify themselves. Ah, ignorance is a bliss… but not really. There is always a choice, and people choose to be ignorant so they can be superficially happy through materialism and instant gratification. They like taking the easy way out, though it is only temporary, but they don’t care if it’s only temporary.

Being in denial, people try to become something they are not. And whether they know it or not, that builds up a void within… you can think of it as a spiritual void or a feeling of emptiness. Call it what you want. As this void gets bigger, people try to fill it with external things, which are paid for with money or credits — money they don’t have. These external things provide instant gratification and the perfect noise to mask that void. As time goes on, they lose a great deal of responsibility, integrity, discipline, and compassion with such behaviors.

I don’t think people should blame credit cards. Credit cards are merely financial tools and dead object. Like subprime mortgage, like all other forms of intelligent(dumb)financing program. Like money. They are all dead objects. How can they be held accountable? Companies make them available, and people choose to use them.

I think life is structured a way that allows us to make many mistakes. We can make a lot of mistakes at different times, as long as we recover from each. And frankly, we all make mistakes in life. We need to do our best to stay aware and catch and correct mistakes as quickly as we can. I cannot fathom that it is one big mistake that brought everyone down to their knees. Humans are tough and adaptive creatures. The key lies in being aware and always learning — the opposite of being in denial and ignorant.

It only becomes the big issues today as people remain in denail and continuously make the same mistakes, until one day — WHAM!!! — they found out they are holding on to a thread hanging off a cliff. They tried to chase after the something that they vaguely see and believe that will bring happiness but won’t and now they need to catch themselves before they fall. They need to recover from their mistakes, and they will if they choose to.

Indeed, we need external things for survival and for pleasure. It’s a part of life. But when you look to ONLY externals for happiness, you are chasing after shadows.

I believe happiness happens when you look within yourself first. When I said to look within yourself, I mean to find the values in life that are important to you. You need to get to know yourself. Know what you want in life. To each person, there are many important values, so you must prioritize, and I dare claim that no one should have money and fame at the top of the list. With such a list, you shall know what is “enough” and hence, be able to distinguish between “wants” and “needs”. You can then simplify your life and not have excessive externals yet be content, though remember being content does not mean being satisfied and complacent.

Problem happens when people never stop to find out their values. Again, they try to become what they are not. I don’t believe it is entirely the people’s fault because of how they become conditioned the way their are — constantly being distracted by advertisements, bombarded with information, and conditioned about money/appearance/fame. As a result of those: They think they will be happy when others see them as rich. They think they will be happy when they have that next-best-thing. They think they will be happy when they beat their neighbors.

However, there comes a time for each of us to come to understand that such a culture doesn’t work and therefore, learn not to buy into such a culture. It is not easy, but it is what we need to do. This is where discipline comes into play, and where we take responsibility for ourselves.

So at the same time you are learning and reading about all those “methods” on how to get rid of debt or to build your wealth, why not take a pause to learn about yourself and get your values straightened out? Because if you don’t, your changes will likely be short-lived because your character has not changed.

You can shred your credit cards, but if you don’t fix the problem by fixing the fundamentals, the problem will come back as easily as it is to shred the credit cards.

Originally posted 2008-03-28 10:22:28. Republished by Blog Post Promoter

How much money do you save per month?

Came across this survey on CreditDonkey.com – Scary: Americans Saving Less Than $100 a Month. It’s always interesting to see where ourselves stand compared to others.

Saving per month 2012 2013
$1000+ 5.0% 6.8%
$500+ 9.6% 12.9%
$100+ 30.2% 46.8%
<$100 55.2% 33.5%

Although the sample size is relatively small at just over 1100 respondents, the figures still tell of trends.

A good amount of people has a difficult time to save any each month. Although for the topic of saving, the trend is going in a good direction with more people being able to save more than $100.

While the life we live include many needs, it remains that with determination, discipline and clarity, there are actions we can take to trim expense by figuring out what’s really needed and save more. I understand it is just very difficult for people in certain situation…

Well, that makes it not surprising that it says 38% “do not have at least $100 cash on hand” in the 2nd part of CreditDonkey’s post. I cannot imagine how nerve wrecking it would be. My anxiety level would go through the roof.

Another thing shown is that it remains difficult for many to save a significant amount of money monthly as people who can or plan to save more than $500 for both years do not extend 20%.

In the end, it boils down to what we want in life. Given, you have sit down and really figure it out. I fall into the saving $1000+ category for the simple reason that I desire to reach financial independence sooner than “retirement age.” That is a purpose I’ve had. I want it bad enough.

Saving. It’s a choice. A decision that each of us has to arrives at on our own.

So, it is ok to spend more now and save less if you’re ok to continue [and be restricted] to keep a job or you really plan to succeed in a career.

But because of my said purpose, beyond the need for short-term financial security, beyond the always discussed need of emergency saving, I’m saving above and beyond with a sense of urgency — which makes me quite the minority I believe — though I really have no idea how much my peers save. I always wonder…

So perhaps you can help me out readers… How much do you save? And for what reason?

Originally posted 2013-03-04 23:36:14. Republished by Blog Post Promoter

Talking Ourselves into Depression – Doom, Gloom, and BOOM

Our thoughts create our reality. There should not be any doubt about that. We think, we translate that into words, and that in turn can influence others around us.

And if you have pay attention to the news lately, the thought of a up coming depression is almost unavoidable. It may indeed be true that the situation is as serious as it sounds, but the media is certainly not helping. It’s no doubt that they are driving more fear than necessary by selling all the drama. And they sell drama because it works… it may not be happy things, but people like it. Almost like we are letting ourselves be talked into a depression by ourselves.

This is another form of people taking things to the extreme. When will people stop buying into drama and see reality as it is and simply change with the change?

Originally posted 2008-11-16 23:15:47. Republished by Blog Post Promoter

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