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Friday, October 10, 2008

One man's reaction to 'blood in the streets'

As the credit crisis burst from the business pages to the front pages, I’ve gotten one question pretty regularly:

“What are you doing with your money?”

It’s usually asked with sound of concern in the person’s voice. After all, the sickening drop in the stock market has stoked fear about our financial future.

Still, the question catches me off-guard, because I’m not an investment wizard like Warren Buffett. Or a Motley Fool. In temperament, I’m 180 degrees from Jim “Mad Money” Cramer, who ran a hedge fund. Me, I’ve just trimmed hedges.

But since you’ve asked, the answer is “nothing.”

This market meltdown hasn’t spurred me to do anything different. Rather, I continue to try to raise my assets and lower my liabilities:

* I contribute to my 401(k) plan and my kids’ Coverdell college savings accounts.

* I’m paying down a home-equity line of credit and pay off credit cards each month.

* And I’ve been rebuilding my savings for an “emergency fund” to make sure I have enough cash to pay three months of expenses.

As a business journalist, I lead a pretty boring investment life: I don’t own any stocks or bonds. My retirement accounts hold mutual funds only. And I don’t check them very often.

In mid-career and with children who are a few years away from college, I still have time on my side. Even if it takes 10 years for the markets to recover, I think I can reach my financial goals.

I am looking for expenses to cut. The landline phone may go now that I carry a wireless one. And sorry, honey, but the thermostat is going to have to stay at 68 degrees this winter.

The stock market’s cratering every day this month is scary. It’s disheartening to watch $3.2 trillion in value evaporate in nine days.

The language of Wall Street can be brutally descriptive. An old saw holds that the “best time to invest is when there is blood in the streets.”

But the desire to make a killing played a large part in getting us into this global mess. Instead of betting my house in hopes of making a fortune, I think I’ll stick to my plan and root for the recovery to start.
Posted by Mike Armstrong @ 2:25 AM  Permalink | File Under: Investing, Markets | Post a comment
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About Mike Armstrong
Mike Armstrong, a business editor and writer for nearly two decades, is the Inquirer's business columnist and PhillyInc blog editor. Contact Mike via e-mail or at 215-854-2980
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