Looking For A Place To Hide? If you find one, call me. I have long warned my readers that it is impossible to correctly predict market directions with a high degree of accuracy. I also warned that, if you can't anticipate the future, the next best thing was to be resilient and ready to persevere when negative events happen. In my thirty years as an entrepreneur, I went through a number of negative events and watched clients and colleagues do the same. Those that fell by the wayside were the ones who blamed others for their misfortune and expected someone else to bail them out. Successful people realized that they created their own existence and were responsible for correcting the situation. By resiliency, I don't mean that you should sit where you are and do nothing. That also is a recipe for disaster. What you have to do is assess the situation and develop a coping strategy. Of course you could be like Bill O'Reilly and blame everyone from the oil companies to the "speculators" to the government. His most stupid comment was that the President had the responsibility to monitor the financial markets and warn "the folks" when a disaster like the present one was coming. Can you imagine what would happen if the President called a news conference and warned that certain companies were doing things that put the system at risk. If there wasn't a panic before, that would certainly start one.
The Two Best Things You Can Do. One of my clients suggested that he might purchase a mountain condo which he could use for business purposes. He has $70,000 in cash for a down payment. My advice is one that I would give most everyone: Keep a Cash Reserve and Guard it With Your life. Now is not the time to speculate on anything, much less a mountain condo. I don't mean that you should have all your money in cash, only that you should have enough to see you through a crisis or take advantage of opportunities that may arise. The next point is Take A look At your spending habits and eliminate expenditures for which you don't receive adequate value. I am a good example of someone who needs to do that. I bet I could cut $500 a month from my expenditures and barely notice it. While that doesn't sound like much, in this market it would take $100,000 in capital to produce that kind of income at a reasonably safe rate. I am going to work on that while I am in Denver.
Hospices, Hurricanes, and Other Unfortunate Events. It's been a difficult summer. I just spent two weeks taking shifts in a hospice watching Betty's brother go through the trauma of dying. He was only a year or so older than me. It was hard on everyone. My son-in-law lost his mother to pancreatic cancer. She was a beautiful person who will be strongly missed by all of us. A hurricane blew into the Southeast Texas area and left a lot of my family members without power. My brother-in-law's barn was virtually ruined in the wind and one of my neighbors on the lake lost virtually his whole house when the roof blew off and the inside soaked with 12 inches of rain. I lost a few trees, none of which hit the house, gazebo, or boat house. I am lucky but I guess I hurt for all these people. The trauma of the current financial markets is certainly secondary to what happened to lots of other folks. I can little afford to quit fighting at this point. It's what I've done for most of my life. I am reminded of a joke one of my buddies used to tell because it reminded him of me. It is about a man who fell from the top of a 60-story building. When he passed the 30th floor he looked at the people watching and said, "So far, so good." I guess my friend, who died 12 years ago, was right about me. Next week, I'll have some comments about the markets with an emphasis on energy.
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