Spring is in the air, the NCAA Tourney is in the sweet sixteen round and market participants (almost) everywhere are breathing easier as the rally continues to lift prices. Before anyone gets too worked up, this rally is either just a feel good rally or the real thing, we know it is one or the other. If we know that it is one or the other then there is the very real chance that it goes back down after it tops out. As we understand this now while prices are going up then there is no reason to freak out if it does go back down quickly.
Your drug company will still sell medicine, your industrial company will still sell widgets, your utility will still deliver power to its customers and the odds are overwhelming at this point that your bank will still take deposits and honor your checks. None of that tells you what direction the next 20% will be for the stock prices and for most of us it does not truly matter.
Different subject; I found this article on Yahoo Finance yesterday about talking to older parents about their finances. Asset prices are down which quite obviously threatens income streams so maybe we in our 30s, 40s or 50s need to talk to our parents.
It was a fine article but I also think many people need to talk to themselves about their own finances, more specifically having realistic expectations for portfolio results, having the introspection to recognize limitations of investment ability and most importantly, I say most importantly (channeling Foghorn Leghorn), reassess every aspect of their spending habits. I am convinced this will be a bigger cause of financial plan failure than anything else.
This is difficult to take to heart but this is an issue for most people and usually when I try to have the conversation with someone it doesn't go well (can't rule out my poor communication skills as a cause). Some folks don't view their extravagance as expensive, some expect the market to bail them out, some expect to spend less when they get older and some are in another form of denial. I know this falls on a lot of deaf ears, but I'm telling you...
Thanks for all the comments yesterday about the CNBC visit.
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2 comments:
Roger,
it was great seeing you on CNBC. You are the best of the lot; upfront, sincere and most of all with good business knowledge. Regarding being older and retiring, what makes a big difference is owning a home, since paying escalating rents becomes more difficult on a fixed pension. My advice is to get a home as a necessary retirement plan. For those that jointly purchase a home with their spouse, have a well-written agreement before purchasing, since divorce can leave some people with nothing. Life styles and customs are strange in the states; some do get the short end of the stick.
Market - In this market there has been some rotation. However the volume has not been as much and you are right that it will probably test the bottom or at least trade in a range. Seeing legislators talking about new and stricter rules is a hope that there will be a turnaround.
Best,
Jeff from Milan Italy
thanks for the kind word Jeff.
clearly not having to pay rent or a mortgage in retirement relieves a huge burden off of the income need.
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