MasterPo says: This blog is about topics and issues that are of importance to me. I am not one of the countless blogging lemmings that are tripping over each other scurrying down the hill and off the cliff of blogging oblivion trying to write the greatest blog on the latest topic de'jour. Your comments are welcome.


March 7, 2010

To Catch a Falling Knife


MasterPo lost money on Enron.

So did thousands of other investors. And by extension thousands if not millions of other people by way of their mutual funds, 401ks and pensions.

MasterPo didn't bet the farm on Enron but for a time it was the star of the portfolio. You don't sell your stars unless you absolutely must. Right?

Mrs. MasterPo has often asked why MasterPo didn't sell out as the stock dropped.

Part of the reason was so much of MasterPo's Enron holdings were in the Dividend Reinvestment program and as such it isn't so quick and simple to sell as holdings in a brokerage account or mutual fund account.

But another part was simply time.

Enron's fall came very fast! By the time the news came out and the full picture of the company's problems were on the nightly business news it was all but over for Enron. Even if MasterPo's Enron holdings were in a brokerage account, at that time (regrettably) MasterPo simply did not have the access to hour-by-hour financial news. As such it was impossible to see the events unfolding and react quickly enough. Even today watching the minute by minute stock market isn't MasterPo's full-time job. MasterPo has better access to information now but still not immediate feeds. Besides, markets go up and down, company stocks go up and down, all the time.

However, this article isn't about MasterPo crying over a stock loss. Wasn't the first lost and certainly won't be the last.

The point of this article is this:

When end of the party comes it will likely come FAST!

When that end will be? Who knows. Depending on the pundit, commentator, or alleged financial guru that could any time from tomorrow to 5 years out. MasterPo will break one of his own rules and toss a market prediction into the mix as well: 18 months or less. (Footnote: Interestingly however, there are no credible predictions that a massive market drop is never going to come! Just a matter of when in the not-too-distant future.)

Predictions run all over the spectrum from a double-dip recession to 1929 all over again (or worse) to a Road Warrior style collapse of the economy and society (that may be a bit extreme, though not entirely out of the realm of possibility).

MasterPo isn't going to offer advise on how to prepare for the crash, largely due to MasterPo also not being sure what one can really do to prepare for it. At least not at this time.

But MasterPo will advise that when the drop comes it will come immediate, unforeseen on that particular day (though afterwards pundits and wanna-be financial celebs will scramble to take credit for having predicted it), and happen very very fast! There will be no time to prepare when it starts. It will be a come-as-you-are event. Whatever resources you have on that day don't expect to be able to bulk up any more. Maybe you will be able to, but don't count on it because just as you see the worst happening so do all your friends and neighbors.

In truth, the actual events when they happen will probably be a lot more severe that many people think it will be, but not nearly as totally chaotic has many others fear it will be. The extreme ends rarely happen.

The time to prepare is now!

Just what "prepare" means isn't clear.

If anyone has real advise on preparation (not the usual buy gold and guns rhetoric) MasterPo is listening.

2 comments:

Morrison said...

Get out of debt. Live in a mortgage free home. Have savings in an FDIC bank. Stockpile canned food AND water. Be prepared to barter, so have a marketable skill. Have 'things' that can be traded. Start a garden. Do your own canning. And cooking. Make friends. Pay attention to current events. Follow what is happening in Greece and study how those folks are surviving. Learn from them.
I still advise to have some gold & silver coins. If not, have some jewelry. You may have to one day protect yourself. Things in LI can get very scary. There is only one way in and one way out: L.I.E. I learned all about that on 9/11/01.

Set up a plan with your family. On 9/11 telephone & cell phone service went out. But we had a contact outside the city and coordinated everything through her. I learned that from advice from those who live in Israel.

Pray. Very, very hard.

And live each day as if it were your last. Don't let the sun set on an argument. Say 'I love you' each and every day. Forgive and forget. Now, move onward.

Good luck.

MasterPo said...

On the whole pretty good stuff.

But...

You can only store so much food and water. Putting aside expirations, you can't really stock piles months worth.

And FDIC - Are you serious?! A guarantee from the same government that is financially collapsing the country?!

Better off with cash in the mattress if at all.