Comments on: Where does cynicism fit into your portfolio?

By: Buildingequity

Buildingequity — Wed, 27 Feb 2008 19:46:13 +0000

To moneysmartlife, I think it was Baron de Rothschild who said: “When there’s blood in the streets, buy property.”
But who said, “It isn’t timing the market, it’s your time in the market…” refering to building wealth thru real estate.
I agree you need to have a long term perspective. Not necessarily 40 years, but at the very least 5-20.
I think it is important to diversify too. What do you think? Stocks, bonds and Real Estate and Real Estate in different geographic markets. Thanks for listening.

By: mbhunter

mbhunter — Sun, 07 Jan 2007 05:24:32 +0000

Foobarista, thanks for your comments!

I’m not sure how Malthus has a bad track record. If you’re referring to the Principle of Population, perhaps we’ve beaten the subsistence curve for so long, mainly through great advances in technology, that it’s assumed that it will continue. Perhaps the real checks on population growth have yet to be realized. Peak oil could do this.

By: fivecentnickel.com

fivecentnickel.com — Sun, 07 Jan 2007 02:39:04 +0000

Weekly Roundup – 01/05/06…

MBH is ‘glass half empty’ kind of guy — or at least he was this week when talking about the financial future.
FMF talks about turning a hobby into an income.
Flexo has a couple of interesting pieces on what sort of income you have to …

By: Foobarista

Foobarista — Sun, 07 Jan 2007 00:28:26 +0000

For me, this is a sort of “Pascal’s Wager”. The upside from assuming that these _won’t_ happen are far greater than the upside from assuming that they will. After all, if you’re a pure cynic, the most rational strategy is to be a pure hedonist, living large, running up as much debt as you can get away with, and then let the debt disappear when civilization collapses. In the early 1980s, when everyone thought The Big One would destroy civilization soon, there were people who actually acted on this. When civilization didn’t end, they had to visit their local BK lawyer…

As for more practical issues, I think the most likely “cynical” scenario is actually one that could help immensely, but will hurt “planners”: a change from an income tax to a consumption tax. This will really hoze Roth IRAs since you’ll be effectively double-taxed.

As for “peak oil”, “global warming”, this&that worry about monstrous financial disasters, and the zillions of other talk-show calamities, I prefer to ignore them. Malthus and his heirs have an awful track record.

By: mbhunter

mbhunter — Sat, 06 Jan 2007 06:59:17 +0000

Thanks for all the comments.

I don’t think that some of the worst worries will come too suddenly. There will be a fair amount of warning, as in there will be more restrictions on tax-advantaged accounts, or corporations will offer broad buyout packages, or gasoline will hit $4 a gallon.

It’s not going to happen overnight, so if the sky is falling, it’s falling slowly, and there’s time to go to the umbrella store and time to store food for the winter. Forewarned is forearmed!

By: moneysmartlife

moneysmartlife — Sat, 06 Jan 2007 06:58:18 +0000

I think your points are good examples of why considering your investment timeframe is so important.

If things do go south and you need the money in the near future you could be in trouble. If you have a 40 year time frame then you should have time to recover from a financial meltdown.

It might even be a buying opportunity. Who said “When there’s blood in the streets, buy property”?

By: dimes

dimes — Fri, 05 Jan 2007 18:07:27 +0000

Every time I put money into our Roths I imagine they’ll repeal the tax-free-ness of it or give me a refund on the taxes I paid in 2005 or 2006 in order to tax me upon withdrawal. It seems like the people who try to do the astute things (like save for retirement, plan for disasters, wait until they can afford children, etc) get forced to subsidize the fracking morons who didn’t.
Something you didn’t mention above but I’ve also thought about: If we ever win the lottery, we’ll have insurance coming out the wazoo before we even contact the gaming commission. In fact, if we ever become reasonably wealthy it’ll be the same story. My hard work, good luck, or whatever doesn’t need to go directly into the pockets of people like John Edwards.

By: Free Money Finance

Free Money Finance — Fri, 05 Jan 2007 11:22:53 +0000

Star Money Articles for the Week of Jan. 1…

Here are interesting posts and news this week from the MoneyBlogNetwork members and beyond: Blueprint for Financial Prosperity is approaching $200,000 in net worth. Consumerism Commentary answers basic questions about income and taxes. AllFinancialMatt…

By: MsMiniducky

MsMiniducky — Fri, 05 Jan 2007 04:30:25 +0000

Holy moly, I’ve been thinking about this a LOT lately. Of course I still follow through with my planning and budgeting and all, but as Rebecca says, I tend to find myself understanding that to some degree it may never matter how hard I scrimped and saved and toiled: we’re just a catastrophic event away from having to start over so, how flexible and resourceful can I be?

There are people who can end up broke and rebuilding assets more than once, but I don’t think I’m one of them. Not yet, anyway.

Certainly, Jim, the sky may never fall, but then again, in some ways it might. It’s not so farfetched to me at all. My parents had to leave everything they knew behind to start all over with nothing in their pockets. That was just 30 years ago.

Ironically, I find that these thoughts push me to relax a little and live life a little more than I’m normally inclined to because maybe I’m saving for an idealistic someday that can never be.

By: rebecca

rebecca — Thu, 04 Jan 2007 19:37:25 +0000

Thanks for the post – I think about these things quite a bit! I tried reassuring myself by reading history – but anything with a span of more than a hundred years or so, and with more than just a single nation focus, turns out to validate these fears rather than alieve them.

Although it hasn’t made me stop maxing out my Roth IRA or paying my mortgage, it has made me more careful to diversify more than I otherwise would have… partly in the sense of real estate as well as stocks as well as broad foreign investments, etc, and partly in the sense of “how confidant am I that if were to lose everything I’ve currently saved, and find myself in an ecconomy that’s rapidly shifting, would I have generalizeable enough skills to make myself anew? And look out for a family while I do so?”

Again, I don’t tend to alter my life dramatically as a result of these thoughts – I don’t have a gun filled bomb shelter under my house or anything – but the idea of living somewhere that would have reasonable access to both food and society should, say, peak oil scenarios turn out to be real and immediate… and having a decent understanding of real medicine without major hospital equipment (I work in medicine, so this is within the scope of my professional life already)… these things do affect my life decisions in subtle ways.