You’re Not So Financially Ignorant
A lot of people have been feeling pretty stupid for losing money this year in the stock market. I’ve even lost money this year, at least 40% of my portfolio, and I have a traditional money market account, which is supposed to be one of the safest investments out there. Okay, I have my broker being a bit more aggressive than most people, but there was still no way anyone could have seen what has happened coming.
In a year where the big three car makers in America have gone begging for funds from the federal government (well, until Ford backed out at least), there had been talk about how the foreign model of success was something that the American car makers needed to model themselves off of. That was until the past week, when Honda, Japan’s No.2 automaker, put out the feelers that the third quarter report could be one of the worst in its history, and right now Honda is expected to cut its annual group operating profit forecast to about 300 billion yen ($3.33 billion), a drop of about 70% from a year earlier, the Nikkei financial daily reported.
This news is now being followed by Japanese auto giant Toyota, who stated today that it would suffer an operating loss due to plummeting auto sales. Supposedly this is Toyota’s first operating loss since 1950; that’s pretty phenomenal if you ask me.
And, of course, the biggest news comes from Wall Street, where one of their own, or at least a former “their own”, has not only outed himself as running a Ponzi scheme on some of the biggest investors in the country, and taken billions of dollars from, well, pretty much everyone of note, but Wall Street itself missed it for over 10 years, even though the signs were there that something bad was happening.
Frankly, if the people whose jobs depend upon knowing what’s going on financially within their own industries and the world are failing, why should I expect that I would be able to do something better? Then again, I do plan on doing some things differently than everyone else. For one, I’m about to add more money into my account.
Not much, but just a little bit because I want to show some confidence in the market. I’m also doing it because, depending on who you decide you want to believe in, the market could turn by mid-year 2009, or may last until the beginning of 2010.
The one thing I do know is that even if the little bit I’m planning on adding loses initially, it’s not about the dollars as much as it being about how many stocks I have in play by the time the market decides it’s ready to play nice again. And, with a money market, if I add to the numbers slowly, I won’t lose too much money initially, even if I do lose, but when the market rebounds, I’ll recover my lost funds quicker.
As Justin wrote in his piece on buying and holding, it’s never bad advice to continue buying something, as long as you’re smart about it. What say you?