Thursday, October 2, 2008

China, the next economic empire?

This chart of the Dow Jones is from 2007 and it has rebounded from that low, but will it ever rebound from the losses of the recent past. I am a financial pessimist. I think America has peaked and we are not ever going to fully recover from this economic diaster. I believe the Empire status we have maintained for the last 60 years is moving toward China.

So what does that mean. It means that people like me who were poor with lousy parents won't be able to go to law school, it will be difficult to rise above your station, as it already is in most countries. Try coming from the wrong side of the tracks in Mexico or India or even Great Britan and raising your economic status, very difficult.
I worked for a varies of financial firms for over 10 years and have a lot of comfort about my understanding of how the financial markets work. the industry the first thing you learn about marketing stocks, etc. is "Past performance is not an indicator of future performance." Look around, it is like the nutritional information that is now required, the "Past Performance" language is EVERYWHERE...statements, prospectuses, ads in magazines and newspapers.
So when someone tells you, "oh it will get better, or the market has ALWAYS".... they don't know the answer, the experts do not know, the stock brokers do not know, just because someone tells you that you have enough $ to survive until retirement...THEY DO NOT KNOW IF THAT IS TRUE...just because it would have been true in the past, does not make it true for the future.

So what do we do about it. So every day for the last 2 weeks MonkeyBoy and I have talked about how we have our retirement $ invested (I am turning 60 this month). Should we sell anything, should we invest differently, should we sell everything at take the cash and put it under the mattress.

The problem with that solution is that if the $ continues to decline then your stash of money declines. What will it cost to buy a loaf of bread in 10 years (I am not so worried about 20 years from now, I don't expect to be alive at 80).

So I had some money in an IRA that was in cash, that is of course crazy, because if you decide you need cash your IRA is the last thing you want to sell from becasue you have to pay taxes on it, but oh well.

So today we invested some of my money in a Chinese Mutual fund. Probably not a good time right after the Olympics and China having been in the spotlight all summer, but since I believe that China is an up and coming country it seemed like the correct decision.
I have had these beliefs for over 5 years and they have not changed. I of course hope I am wrong.
That is all

1 comment:

Ali Baba said...

Rough. What about Brazil; they have all that oil... :P

I'm certainly hoping and praying/sending positive thoughts to the Universe that "everything will be fine" and that I can continue to be fed and housed and all that...

(and it would be nice if we could travel and blow stuff up in the desert) :P