Economic Financial Crisis
Posted: October 10, 2008
This past week was a scary time for everyone who has invested in our economy. For about the past two weeks, I have avoided paying too much attention to my personal investments - mostly because I knew the true value of my current portfolio has declined substantially and if I actually visualized the status of my 401(k) and other holdings, it would put me in a bad mood and make me look for a snorkel.Fortunately, I have found solace in the fact that the recent losses are mostly on paper.
I began to realize this week that I have never personally experienced a financial crisis that has adversely impacted my pocketbook like what has occurred over the past six months. During the gas supply crunch and rising energy costs in 1974, I was only nine years old. I remember Mom and Dad reminding us kids that we would not be able to take a long summer vacation that year. We were also told to be sure to turn off lights when leaving a room to conserve energy. Even though I sensed some parental anxiety, as a young boy, I was more concerned what buddies were going to play in the next whiffle ball game and what time dinner was being served.
When the stock market crashed in October, 1987, I had just started working in Eau Claire. I was one year removed from college and really did not have too much invested in my future. In fact, I mostly lived paycheck to paycheck. But I do remember meeting small business owners at the time who lamented about the downturn in the economy.
The tech stock bubble that burst in 2000 is still fresh in my mind since I had started to establish a nice nest egg that lost considerable value. Likewise, after the 9/11 tragedy, the stock market declined sharply. Yet, most of the paper losses six or seven years ago became nice gains over time and allowed me to continue to plan for retirement.
This latest purge on the value of my investments is hitting me harder. Like others who try to save for life after work, I have about 30 percent less than I had 18 months ago. I am sure many other investors (and especially small business owners) who are between the ages of 35-50 are probably in the same situation for the first time. Those who created a "rainy day fund " or have saved just in case the economic climate worsened are probably on more solid ground. But it is obvious that many others do not have the luxury of maintaining their existing lifestyle because of the difficulty accessing financial assistance.
I try to remind myself that I am a "glass-is-half-full " guy, but I have this bad feeling that the worst is yet to come. Keep in mind, though, that most of my negativity is the result of trying to function in unchartered waters.