Sunday, June 12, 2011

Expecting Fear and Panic to Prevail

"Insanity is doing the same thing over and over again but expecting different results." ~ Rita Mae Brown

I'm not normally one to completely exit the market.   I may go 50 to 60% into cash, but I always keep a significant amount invested in stocks.  This time, I'm bracing myself and our portfolios for a major decline in the stock market.  I've sold the majority of stocks in our IRA and taxable accounts and have less that 5% still invested.  I still have a major holding of stocks in my company's profit sharing plan, which I am not counting in the 5% and am keeping to hopefully do an  Net Unrealized Appreciation withdrawal six years from now. 
Here are my reasons for my giving in to fear:

  • The stimulus is a failure.  After 2-1/2 years,  the results from stimulus are abysmal.  Yes, I've heard all the excuses:  it took 8 years for the Republicans to create the issues, the stimulus didn't go far enough, can't expect a turnaround in such a short time, etc.   It doesn't matter why the situation exists.   What matters is the current situation is bad and not trending better. 

  • Obama and Bernanke deny seeing the issues.  Both have publicly stated that the economy is still recovering and nothing different needs to be done.  The current decline is only a "bump" or "soft patch."  They expect to continue the existing economic policy.  In my opinion, no change means no hope for improvement.

  • I remember the pain of staying in the market during 2008 - 2009 even though the economic situation looked bad and experts were telling me there were not any catastrophic issues.  I suspect there will be many others that remember the same pain, especially if the stock market declines for the seventh straight week.

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    This is not financial or investing advice. Please consult a professional advisor.

    Copyright © 2011 Achievement Catalyst, LLC

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