Having perspective on a matter is vitally important. Seeing the bigger picture and not allowing emotions to control your decision making is a wise strategy for any endeavor. Nowhere is this more apparent than the recent example of “the sky is falling” drumbeat coming across the transom due to Wall Street’s recent wave of volatility.
I was somewhat reluctant to tackle this post, as me writing about success on Wall Street is the equivalent to Doug Mirabelli being asked to instruct the rest of the Red Sox on fine art of base stealing. In case my reference is lost on you non-baseball sorts, Mirabelli is a lumbering back up catcher who has 3 lifetime stolen bases in 12 MLB seasons. My point being, I obviously missed Wealth Building 101 whenever everyone else sat in, because I’ve never been very good at making large stores of cashish. While it seems like most other members of the middle class are all driving new cars, or at least vehicles that are 2-years-old, or less, I’m still tooling around in my 10-year-old Taurus wagon and intend to keep at it until the wheels fall off. Not having a car payment is a wonderful thing and I’ve grown attached to my trusty Ford, cassette deck and all. It does make you feel like you've missed a turn, somewhere, when people at business networking events, with less drive and determination are rolling up in luxury vehicles of various types. We do live in a consumptive society, where outward shows of wealth are in and intellectual curiousity and a willingness to help people aren't necessarily attributes for success in the 21st century, however. But I digress and got off topic.
There are a number of choices I made in life that have affected my net financial worth, so I’m not bemoaning those who fall into piles of dung and come out smelling like a rose. We are what we are. Like many areas of my life, however, I’m trying to live more intentionally and this even applies to my finances. While I haven’t hit the mother lode in the equity markets, my retirement portfolio isn’t doing badly. Hey, me having a portfolio to talk about is a bit of an inside joke, itself. This may be partly by accident, as I’m not one to check on my performance minute-by-minute, like some people I know. I’m in it for the long haul, diversified, with a healthy mix, weighted towards the blue chips, with some foreign exposure and some token socially responsible investing, like any good liberal would do.
It’s been my contention, for some time that much of our economic growth has been artificially enhanced, by speculative investing. Granted some people have made a boatload of money this way and have all the accoutrements to show for it. However, many of these same people might be thinking about diving out of a Wall Street window, given some of the recent rollercoaster-like activity of the Dow.
Much of this volativity, at least to my financially-backward way of thinking, is driven by overly extended lines of credit and by extension, over-leveraged holders of debt, artificially low interest rates (thanks to the Fed) and flat out greed. On that front, I’m not too worried. I’m not interested in flipping houses, or other assets, so my position bodes well for weathering the storm. Worse case scenario, if we see a total meltdown of the economy, circa 1929, I’ve got plenty of grassy area I can plow under and grow crops, rocky Maine soil and all. My better half and I both have bikes and I’m a decent shot with my trusty sidepiece.
Don’t get caught running with the herd. I’m shutting off the talking heads and lunatics like CNBC's Jim Cramer and taking a historical perspective on the market, looking at graphs like this one, this one and this one and not this one. I’d urge you to do the same. That might be better advice than many overpaid financial “gurus” gracing the plasma screens are offering, right about now.