Does Misery Really Love Company?

Confession, they say, is good for the soul. In this business it also helps drum up some really good e-mails.

In a column last week, I reminded people that I had (almost) warned them a year ago that the market was going to “crash” last week. That inspired alert from yours truly, which probably would have won a Pulitzer Prize, at least, was marred by one teeny problem:

The column, scheduled for October 7, 2007, never ran.

Why it didn’t run isn’t important now. The important thing is if it had, I’d have easily won the Pulitzer Prize, at least. And had it run and had you read it you wouldn’t be in such sorry shape now. Nor would I, had I taken my own advice.

I think we’ve both learned a good lesson!

If nothing else it shows that hindsight is indeed 20/20 and confirms all those times when, after the fact, we said we knew better. This applies to many aspects of life including investing, marriage and petting a pit bull whose owner says is a sweetheart.

Also, the column prompted some neat, and educational e-mails from readers. Including one from somebody who really did spot trouble coming before it got here:

• Mike, OK you’re a smart-ass, but you’re our smart-ass. I read your article, expecting about the advice you offered, but expecting the second half as well: when to get back into the market. Here’s your chance, Bud, to redeem yourself and your reputation as a forecaster and seer.

  As luck (and I do mean luck and not astuteness) would have it, I decided that there were sufficient storm clouds already visible back in April 07 and took a bunch of money out of the “C,” where almost all my TSP was invested, and into the “G” and then crossed my fingers. My philosophy had been strongly akin to your advice: think long-term and ride out the storms. But with retirement now visible on the horizon (December 2012) and things looking shakey, I bailed. I still put 100% of my contribution into the “C” and with matching, I’m putting in 19% of pay. But I managed to avoid the big loss I otherwise would have suffered. This is great, as long as I can once again jump into the market for the long term, at something close to the right time, and I freely admit I have not a clue as to when that might be. I asked for an interfund transfer Wednesday, to be effective on Thursday or Friday, to put back about 25% of what I had taken out. I figured that long-term, the Dow at 9,500 would look like a smart buy, and it was significantly lower than my selling price. My “plan” is to wait for next summer, or a Dow around 7,000 to put the next installment in. Do you have any better advice? Any parameters I should be studying?

  If your crystal ball is any clearer than mine, what is it saying about duration of this downturn? Are we looking at a year or two or a decade? I missed the last depression, and I hope to avoid the consequences of this one, if that is where we are headed. What do you think? Bob, China Lake, Ca.

• Great article as always.

  I can’t say that I anticipated this huge decline but if you listen to our discussion on August 14, 2007, you will remember that I certainly anticipated the affect of a credit crisis on your listeners. My message then was that the era of easy credit was over and that your listeners needed to pay off credit card and other adjustable rate debt, no longer rely on the availability of home equity loans and lines of credit, refinance adjustable rate mortgages, build up an emergency fund and only have stocks in their long-term investments.

  Anyone following that advice would be well prepared for current events. Art Stein

Nearly Useless Factoid

October is National Chili Month. Celebrate in style!

To reach me: mcausey@federalnewsradio.com

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