I always write this column on Fridays so that my colleagues who put the paper together have something to start with.
It was tough last Friday, because all I could think about was the previous day’s stock market plunge as the Dow Jones Industrial Average dropped 512 points.
There a lot
of things I could have written about. But all I could think about was the market.
After all, my 401(k) had just this year recovered from the losses of the last several years.
As I kept an eye on the market Friday, I had a lot of questions.
Was it going to plunge again or come back with a gain? Would I ever be able to retire? Should I sell my investments and buy something less volatile?
The market did drop again for a while. Then it rose, with the Dow closing up nearly 61 points.
Will I ever be able to retire? Sure.
The question is whether my retirement will befit the ink-stained wretch that I am or something better than that based on years of investing.
As for selling it all, I’m just not going to do that right now and you shouldn’t either.
Here’s why:
Thursday’s market flop was based purely on fear.
“Markets are either driven by fear or greed, and we’re definitely in the fear period right now,” Matthew Rubin, director of investment strategy for Neuberger Berman, was quoted as saying in the Wall Street Journal.
I don’t want to make my investment decisions on fear. Selling now would only lock in my losses.
What I will be doing in the next few days is going through my investments and making sure they’re still the place I want to be. They’re pretty conservative already, with things like utilities that pay good dividends, a few oil stocks that had been doing very well and a lot of balanced mutual funds.
Businesses are making good money.
Most businesses are reporting solid earnings these days. On Thursday, while the market was melting, GM announced that it had doubled its quarterly profits from a year ago, DirectTV was up 29 percent, Cigna was up 39 percent, Southwest had increased earnings despite rising fuel costs, and AIG also saw earnings increase, reversing a loss of a year ago. Likewise, Adidas was up 11 percent.
Corporations have figured out ways to make some serious money despite the poor economy.
Of course, a lot of that has come from making people work harder for less or the same amount of money, and not hiring many new workers, which is what the economy needs.
I’m betting on the U.S.
Most of the fear that sparked Friday’s selloff was the very real concern that the United States and Europe are headed for another recession.
That certainly could happen.
Our economy seems to be treading water. But I’m hoping it will start reviving itself.
If we dive into another recession, maybe I won’t be able to retire. But other than ensuring my investments are fairly conservative, I don’t know what to do about that.
Putting all my money into gold and stuffing it under my mattress doesn’t seem like a good move to me.
Mike Benbow: 425-339-3459; benbow@heraldnet.com.
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