Friday, October 24, 2008

The Incredible Shrinking... Everything

Maybe Richard Heinberg had it right when he titled his book "Peak Everything." I mean, usually when there's a recession, certain sectors do well. Not the same sectors every time, but the money usually moves somewhere - bonds, commodities, precious metals, real estate... somewhere.

But this time, everything is falling dramatically, and all at the same time. The stock market is nearing a 50% drop from it's peak. Oil is already over 50% down. As is corn. Houses are off about 20%, depending on who you ask. Gold is off 30% from it's peak. Bonds and money markets are both very shaky. All levels of government are reporting shortfalls, sometimes to the point of cutting municipal services.

So where have all those trillions of dollars gone?

Best I can figure is that they just went *poof*. As in massive deflation. Investors would love to buy or hold their gold, but they have to sell to cover their stock losses. And vice versa.

What does it all mean?

I don't know. But I don't think I really like it all that much.

An Indian friend of mine who has been through bank failures, economic swings, and other such nonsense likes to say that at times like this, you shouldn't worry so much about the return on your money, just the return of your money.

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3 Comments:

At 10/24/2008 11:01 AM, Blogger Matt said...

Buffett says a similar thing. Preserving the capital you have is less work than making more capital.

I'm paraphrasing but it's something like that.

 
At 10/24/2008 11:28 AM, Anonymous Billie said...

So far I am still in the single digits for decline in investments. I have been very, very conservative (and a little lazy) and have a lot of my portfolio in cash or bonds. This is saving my bacon! Who knew that laziness results in a fundamentally sound portfolio.

 
At 8/14/2010 4:22 PM, Anonymous Anonymous said...

You've probably heard of the Hindenburg Omen (you seem well read). Happened August 08, followed by the stock market crash of 10/08 that launched us into full-fledged recession. Well, August 10 now has us staring down another Hindenburg Omen. Hold on, it may get bumpy up ahead.

-aNNa

 

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