Archive for October, 2008
Welcome back Franco fan! Please share your thoughts and leave some comments!
Falling home values, growing unemployment, plunging stock prices; how did we get into this mess? Well, in order to fully understand our current economic funk, we need to go back and examine the roots of what has now been coined the credit crisis. So take a walk with me down memory lane while we explore the origins of securitized loans and unregulated swap contracts in a fascinating tail of innovation, riches, stupidity, and good ol’ fashion greed.
Warren Buffett recently penned an article explaining why he is investing in US companies during this hair raising credit crisis. Please take a couple minutes to read it and gain some perspective on the current market conditions in light of previous stock market downturns and the overarching goal to remain focused on long-term investment returns.
Franco
To my chagrin, I was watching a recorded episode of the Oprah show with Mrs. Franco the other night, which was dedicated to being frugal (I know what your thinking…why didn’t they ask Franco to be on the show…invite must have gotten lost in the mail). Other than coming up with some painfully obvious money saving tips (don’t buy new furniture and trade with a friend instead; camp in your backyard instead of going on vacation, etc…), they managed to villianize credit cards as if they had been forged in the fires of Hades and given to us by the Prince of Darkness himself. One very frugal couple was sent to help a not-so-frugal couple come up with money saving ideas (most of which were very useful), which climaxed with the ceremonious cutting of the credit cards. The not-so-frugal husband was even shown on camera saying something to the sort of “I really like this idea of getting rid of our credit cards and only using debit cards to pay as we go.”
During the last couple weeks, we have seen trillions of dollars evaporate with major market sell-offs across the globe. Market volatility is at it’s highest level in decades, housing prices continue to fall, and basements leaks are becoming more and more expensive to fix (oh wait…that’s a local problem for yours truly). All this happy-go-lucky news has left many investors in a state of paralysis wishing the bad man would just go away. At the same time, my most recent scare job about the perils of putting off investing brings us to a bit of a cross road. Should one really be investing their hard earned money into “assets” that seem to become less and less valuable by the minute?
