My advise to you is to watch your savings like a hawk.

Do not believe the mantra: "Stay in for the long haul"

What we are facing at this time is unlike anything this nation or the planet has faced before.

The great investment houses of America are for the most part gone.

AIG is gone and other insurance houses are in deep trouble.

General Motors is virtually bankrupt and Ford is in deep trouble.

Fannie and Freddie have failed

In Europe as I write this the nation state of Icland is bankrupt.

The stock markets of Russia, Ukraine and other European nations are closed.

The Bank of England like the Federal Reserve has taken over its major banks.

This is going to change the very fabric of the Western Democracies and the basis of Capitalism.  We are already hearing talk of the Federal Government purchasing equity positions in major corporations.

In the end I suspect that the Federal Government will have taken over most of the Investment Banking, Insurance and Automobile industries.

If the Market falls a few thousand points the pension funds of the United States will be in severe trouble.

The essential problem the individual and institutions are facing is no matter how diversified your portfolio is there is simply no safe place of refuge except perhaps cash or treasuries.

The old adage of seeking foreign diversification for safety has proven false.

Even Gold has failed to offer much finanacial solace.

It will be most interesting to look back in a few years and see what we have wrought upon ourselves.

Thank you

Mr. P.

I suggest dca into a diverse set of holdings.  which ones will be the winners?  this is why you need to be diverse...

what I mean by a diverse set of holdings, is different asset classes, equities, commodities, real estate, treasuries, all types- intl and domestic..

The notion that gold or other precious metals is a safe haven has proven to be not the same as it was 50 + yrs ago.  Art, diamonds and other similar investments seem to be a haven for the super rich..  All of these commodities have potential for large swings in short spans.

Normally, 401k don't allow a significant amount of diversification out side the equity class of investments.  Then one must use the other savings to achieve the diversification.

remember, this is money you are not planning on spending today or tomorrow, the short term ups and downs should not be a concern.  In ten yrs from now the market will have forgotten about this crisis.

In this current crisis Domestic Equities, Foreign Equities, Commodities and Real Estate have all be creamed. None of these asset classes have protected the investor.

Unless a persons 401K were preponderanty pure treasuries and cash their "diversified" portfolio would have been of no avail.

Even funds holding a lot of cash and high quality bonds have been hurt badly as they are forced to sell off high quality bonds to pay off Redemption demands from their investors.

FAIRX is a good example of this. Their investors who simply want OUT are forcing FAIRX to sell strong bond positions to raise extra CASH.  This damages all of the other FAIRX investors.

 

Mr. P.

Your 36, stop following the train wreck out of fear, and only if it purely interests you.

Turn off the TV, stop buying the investment porn, lots of fear mongering and there is not much you can do about it, since no one really knows what is going to happen.

Wife was out shopping yesterday, the stores were all full with people.  Roads were busy, I did some recreational activity with my son, life goes on..................

Increase contributions to a diversified portfolio, and get on with your life.

If you dont know what to do, then do nothing.

Brian

 

Mr. P -

Not a pretty picture; but - for the most part - true, I think. So I guess it's best we face it. (Except you did leave out the possible future defaults of state and municipal paper as those entities face problems similar to GM and its' paper; there is a limit to taxing authority - especially when the Federal government will need lots more too).

So far, I'm not surprised about gold - its' use is in inflationary times, as I understand it; and in times of unstable currency. So I guess its' recent lackluster performance can be seen as positive, maybe? I don't know.

I am still hopeful that we will find a way forward through all this; perhaps a spartan one for a while? Well, short of bread lines and apple carts, at least.

Ever think how FAST this crisis is moving along? Two months ago seems SO long ago. Why are you SO pesimistic Mr. P? Things will get better. This is America. If we all took a "time out" from investing for a few months, I believe we would all feel better. That is what I'm doing right now. Steve

I know this was talked about a while back but just double checking, I understand that the government has also set up safeguards to guarantee Money Market funds?

Does this cover all of the Fidelity MM funds including the municipal tax free ones and for how much?

 More food for thought :)

John

seeking alpha has a good article on gold,  here,  not that I agree with all the articles on that web site,  it does offer another view.

I do agree with the observation that when I've been in stores they are crowded.  A true depression, from what I was told by my parents, people were scrounging for basics.  In the grocery stores an abundance of 'prepared' meals are being sold.

Are people turning off the cable or dish, cell phones, Internet?

If you are a trader, then these times are very scary, the potential gains and losses are large, and all based on timing.  As we've noticed in the past week timing of 1 hr can make a huge difference.  My computer is not faster than the big houses,  my connection is not better to the trading floor, so I can admit my trading position will always be weaker than the big houses.

I'm an investor, as such, I pay my fund managers to manage my money the best way they think will be a winning strategy.  I don't put a lot of faith in a single management team to be the best, so I diversify among different managers.

I don't have plans to spend this money today or tomorrow.  In 10 to 20 yrs I'll be spending this money, even if I were to retire soon.  Meaning when I retire, I'd need money to last 20 + yrs,  I can't see retiring and going thru my life savings in less than 10 yrs.

"This is America" evokes warm and legitimate emotions but may not be sufficient to solve the current crisis.

I can well imagine our forefathers saying:

"This is Eqypt"

"This is Assyria"

"This is Persia"

"This is Greece"

"This is Rome"

"This is France"

"This is the British Empire"

The very fact that the crisis is moving FAST and affecting nation states throughout the planet is the reason for concern.  "If" we could take a "time out" is a nice sentiment even a wise one but the dynamics of the current crisis are out of the hands of individuals.

As a matter of fact the U.S. policy of economic "entangling alliances" has made it impossible for the United States to perform damage control itself.

I am sitting it out now myself with my:  CASH and a few individual I-Bonds.

Beyond that the matter is out of my control.

Thank you

Mr. P.

Kerryvan - I'm having some second thoughts on the stated strategy of mutual funds. For the most part, they are buy and hold. But is that because fund managers believe that? Or, is it because fund managers can't - for many practical reasons - just "dump" their shares of GE one day and buy them back 2 months later?

I have to believe that some fund managers saw the writing on the wall - and saw the benefit of "going to cash" for a while. But is selling out of the market really an option for them? Can you imagine the havoc of frequent trading by mutual fund managers? So, maybe they really have their "collective" hands tied to some extent. And one has to ask - is their PR arguement disengenuous?

I agree Mr. P.  The game has changed quite dramatically, quite quickly and will never be the same again.   In a span of a few weeks, we've gone from "chance of recession" to "possible global meltdown."  The entire credit-based system is teetering on the edge.  Hope is the most destructive and dangerous emotion when it comes to investing.  The world economy is in for YEARS of slow or no growth, starting with the world's consumers right here in the USA.  You don't correct from 20+ years of credit expansion in months, or even years for that matter.  On the horizon?  The continued derivatives threat, millions of more mortgages resetting through 2011-2012, a tapped out consumer, unemployment, thousands of more bank failures, the list goes on and on.  And that's just here in the states.  Add to that constant government intervention that will continually change the rules of the game and prolong the suffering for many many more years afterwards.