The Random Comic Strip

The Random Comic Strip

Words to live by...

"How beautiful it is to do nothing, and to rest afterward."

[Spanish Proverb]

Ius luxuriae publice datum est

(The right to looseness has been officially given)

"Everyone carries a part of society on his shoulders," wrote Ludwig von Mises, "no one is relieved of his share of responsibility by others. And no one can find a safe way for himself if society is sweeping towards destruction. Therefore everyone, in his own interest, must thrust himself vigorously into the intellectual battle."

Apparently, the crossword puzzle that disappeared from the blog, came back.

Thursday, January 6, 2011

Stock tips... almost guaranteed

As some of you may know, I "play" the stock market a tiny bit. I am not a Day Trader nor an options guy nor a major speculator. I am more like that mousy accountant from Sheboygan who doles out his $5 chips very carefully at the BlackJack table in Las Vegas. The accountant will spend all evening enjoying his free drinks and risking no more than a $100 in total. Once that's gone, he'll leave the table and go to bed.

Likewise, I have my limit. And I have my limits. I know them both very well. So I have, overall, gained a little more than I have lost. Mostly out of sheer luck. I am no Wall Street Wizard. I do not have the High Roller's bankroll. I also do not have the nerve to risk all that much. I get the shakes lining up a $1 putt.

The market is a funny thing. Though I rarely see anyone laughing about it. For the last couple of years, it has been bouncing up and down, like a puppy trying to get into your lap. When it finally does, it's so happy it pees on your pants.

People watch the Dow-Jones average and think that is the market. It isn't. Though the Average may be an indicator of overall activity trends, it represents only a tiny part of the market. I have had stocks (and funds) that have gone up nicely when the Average was heading down. Conversely, I have had holdings dropping like those birds in Arkansas and Louisiana while the Average is roaring up the mountainside.

There are people who make fortunes predicting market trends. They run all these calculations, examine "key indices", gather and analyze financial data, and tell their clients which sectors are healthy and strong and which aren't; which sectors will thrive and which will collapse. They are, in my mind, the modern day oracles, seers, and prophets. I don't trust them. Especially the ones who go on the TV financial shows. I rank them somewhere between used car salesmen and your run-of-the-mill con artists. Sincere though they may be, their field seems like astrology to me.

These are the guys who tell you why the market went through the roof or collapsed in a heap of smoldering ashes. And little of it ever made much sense to me. The market seems to be driven by a bit of mass insanity. A small incident sparks a rumor which travels through the brokerage houses like fire in a sawmill. The traders buy or sell depending upon the aura surrounding the rumor. It seems irrational to me.

While I was writing this, we got a phone call from the brokerage that administers my old company's 401K plan. Apparently, they'd like to get more activity going. Or maybe they were wondering if I had died. I haven't made a change in my 401K since... I don't recall when. I was still working. Somewhere between 2000 and 2004, I am sure. That was when I placed everything in a kind of Guaranteed Interest fund. It may not make much but it loses nothing (except to inflation). I was warned, of course, by a broker who thought I was nuts to do so. But, after the crashes and recessions of 2008, everything I had in 2003, I still have... plus some more.

Remember the Aesop fable, the Tortoise and the Hare? Throughout the last 10 years, I have followed the tortoise. I am not getting rich but I am not getting poor either. I am just getting older.

And isn't that the point at my age?


Steven said...

Hopefully the puppy metaphor will go down in internet history.

Sighting said...

I, too, follow the stock market, more as a fan than a "player," and I had a similar experience. I was "early retired" in 2002 and sometime after that sold my 401k mutual funds and moved the money to my own account, where due to laziness and indecision I neglected to reinvest . . . which hurt me at first but saved me big time in the long run. Now, of course, he problem is that I'm earning 0.000001 percent interest and really should do something else. But the laziness and indecision situation is yet to be resolved!

Btw, do you know of a good online blog or forum for people like us, one that's not a marketing tool but a considered effort to provide info. and perspective?

Douglas said...

Steven, somehow I don't think it will.

Sighting, the only one I can think of is called The Motley Fool. Google it. But, like all things, don't get caught up in it. I was fortunate that my 401K (which I was allowed to leave in place because I actually did retire) had this Guaranteed Interest thing. It paid 4% up until last year and then only dipped to 3%.