On financial/life styles blog that MasterPo frequents the author recently posted an article stating how he and his wife were truly devastated by the market downturn of recent times. Although he states they have long since paid off their mortgage and other debts they still were badly hurt financially by the market drop.
Stating the obvious. So were millions of other Americans. Nothing special with that blogger's revelation.
What made MasterPo raise an eyebrow was this blogger's comments about the market dropt back in October of 1987 ("Black Monday", also sometimes called a "Black Swan Event", on October 19, 1987). The blogger stated that back in '87 once again he took a very deep hit (so did we all). The blogger stated that he was heavily in debt (mortgage, car loans, etc) at the time, basically breaking even in terms of cash flow and counting heavily on investment returns to support his lifestyle. He also claims to have been devastated emotionally and psychologically, having been tossed from his Ivory Tower of expectations of life and work. A fair reaction to an extreme event.
However, the blogger says today he's in his 60's. So in 1987 he would have been in his late 30's to early 40's. MasterPo is very surprised that someone who has since claimed to be insightful and savvy can be so caught off guard by an event like Black Monday and also be so devastated (in every sense) by the event. But hind sight is always 20-20. Sometimes no matter how old we are it takes a major Earth shaking event to provide the epiphany that shocks us into action.
But apparently, in spite of having his entire world rocked by Black Monday, it wasn't all that epiphonic (coining a new word) for this blogger because he was once again caught off guard by the 2008/2009 market drops. And, once again he has been very badly hurt financially due to his expectations of market results to finance his family's life style.
To reiterate, the blogger isn't alone in this. So MasterPo isn't singling him and his family out for any more criticism than anyone else.
Nevertheless, it begs the question: Why wasn't this blogger more prepared for now given his prior devastation in 1987?
To put it another way, why wasn't 1987 a wake up call for him to change his life style so as not to be so heavily market-results dependent to live as he wants?
As long time readers of The Po File well know, MasterPo has no issue with people earning big money through investments and living well from it (no "evil rich" on this blog!). But this blogger's lament about the current market drops rang as a touch of whining more than a commentary.
Someone who's life and life style (and apparently a good part of his ego and feeling of self worth) is so inexorably tied to market results should have taken their misfortunes of 1987 to change their live to either not be so market results dependent or to have some kind of hedging strategy for the "what if" event because the Black Swan does come around again in life.
MasterPo has sympathy for this blogger and all the others who have lost much in this market environment. MasterPo's portfolio too has been hit. But sympathy has to be tempered with the reality of asking what a person has been done to cushion the blow if and when another significant market drop occurs. In this blogger's case, apparently not much.
Hurt me once, shame on you.
Hurt me twice, shame on me.