Monday, September 22, 2008

Nerves of Steel? Me?

My financial advisor* called me on Friday to discuss some options he's considering for one of my investments. While he had me on the phone he asked me if I was feeling okay about all the turmoil in the markets lately (Lehman, AIG, the government bailout, etc). I admiited I was a little nervous about it.

His response: "Really?! Wow, if you're nervous I'd better make sure I call all my clients and make sure they're okay with everything."

I didn't realize I had a reputation as a cool-headed investor. I doubt I'd be so calm if I were doing it myself. But I hired this guy so that I won't have to worry about it, because HE will. And so far my investments, while not doing well, are at least outperforming the market (or under-tanking, if you prefer). At times like these there's little to do but try and ride it out.

What I didn't get to explain was that I'm nervous because the government is stepping in. I have little faith in the government to not screw things up worse. The more I read about what was happening, the more it seems that something had to be done, but whether or not what they're doing is right will take time to determine.

From the response on Wall Street today, I'm not the only one who is concerned.

I understand the call for the government to also do something to help all those struggling with their mortgages. I sympathize to a degree. Why bail out the big companies, who have been hiring the best and brightest to see this sort of thing coming and avoid it, while Joe Homeowner who doesn't have an army of advisors on his side gets no help (at least yet. The government claims there is already something in the works for him)?

I guess it's harder to have sympathy for Joe Homeowner, as I've been in his position. I didn't fall for the pitch. I saw the danger in buying more house than I could afford using an ARM. I guess the difference is that I'm not a gambler. I'm a pessimist, and figured the ARM would bite me sooner or later. I stuck with what I knew, what I could control, and stayed within our means. So where's MY bonus for NOT screwing up?

Well, the reality is, I'm living my "bonus." I am able to sit back and ride out the storm with less worry (I can't say "no worry", as I've learned never to assume my job is safe).

Someone I spoke to recently mentioned hearing a talk show in which the host asked some expert pundit what impact this last week's events would have on the average consumer. The expert replied "Well, if you're living within your means, not much."
That's largely true, but I suspect that sooner or later I'll be getting a tax bill for all of this. I don't have enough sympathy to offer for everyone, and even less tax money. I'd prefer, if it's got to go somewhere, that it go where it will have the greatest positive impact.

The cold, hard reality is that shoring up a few big companies will probably do more than sheltering a bunch of homeowners. As much as it galls me to save the bacon of companies that should have known better, it's more likely to help.

* - Yes, that sounds a bit pretentious, but I've found one that works with me not because I'm rich, but because he wants to help make me rich (and ride my coattails). I can't imagine he's making very much off me at this point, and I've even seen him make moves to minimize the fees he could charge me. I like this guy and the company he works for enough to semi-seriously consider working for them.

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