Monday, May 4, 2009

Why did I ask?

Thank you all for your comments. They helped the discussion a great deal. Mrs. T and I are meeting with the dutch uncle who manages our investments Friday.

At the beginning of 2009 the DJIA fell from almost 9000 to the mid 7000 range, rose to almost 9000 fell and rose again in the same range. I made a very expensive wager when the Dow was at 8900 the second time, that we would see the Dow at 6500 before we saw 9500.

I won, although I'm not terribly proud of that. Now the Dow is back in low 8000 territory again.

In my view of the world, the big banks are still broke, massive layoffs are still occurring, another commercial real estate lending shoe is about to drop, housing prices still fall. The historian in me remembers that during the Great Depression most folks didn't go broke at the crash. Shortly after the crash, the NYSE rallied for almost 8 months. Then the bottom fell out. Not likely to happen again, but...

For the time being I am unhappily content to sit on the sidelines and watch our humble cash reserves dwindle. Mrs. T feels we are missing great investment opportunities.

I badly want to play, but needed a reason to. That's where you came in.



longwing said...

It's a good time for small bets. I think that the original swift decline in economic activity was a purely psychological response to very bad news. But that was unsustainable (people still need stuff) so some kind of rebound was eventual. And of course there is an irrational response that that as well. But like you say, there is still plenty of bad news out there. There is still some unwinding to do. And if the engine for our recovery is just pent-up demand then it's going to be a disappointing recovery.

My guess is that there is more money to be made trying to play the short term psychological reactions than the long term fundamentals. Not that you will see me doing any such thing.

Rebecca Woodhead said...

You could invest in things that numerous governments are commited to long term investment in - anything environmental. Maybe put some money into a company that is finding a viable alternative to oil or look into organic farming.

Over here, in England, we have very little land and we won't touch genetically modified food with someone else's bargepole so you might find investing in organic farming on this side of the pond isn't a bad idea. It should be increasing in popularity over there too as GM is messing up the bees.

Economy-wise, everything over here is down except farming which is considerably up. Some of the supermarkets are doing well too. Tesco is doing the best over all and is expanding over on your side of the pond. Waitrose is a much smaller player - high quality food and lots of organic - but is doing brilliantly.