Wednesday, October 8, 2008

Why I am optomistic about the global recession

I have worked very hard for the last 15 years to accumulate the assets that I have.

I have sacrificed a social life, a family life in the early years and have saved well during the "good" years.

I get the working like a dog part from my Dad and the saving part from my Mum-my Dad was a hopeless saver.

It is hard to watch those assets lose value from day to day but the corollary of that of course is the years that those same assets increased in value.

That is the risk and reward from investing. I know that. Asset values fluctuate from day to day and year to year and there are economic and business cycles that affect our wealth as well.

The latest global banking problems though are new to me but in the back of my mind when I wrote this back in March, I had the feeling something like this might happen.

I have been investing in the stockmarket for 10 years and I am 42 years old, so have lived through a big recession in the 1970s, one in the early 1980s, the early 90s and an impending global something.

I clearly knew nothing about the first two recessions and only had a vague inkling of the 1987 crash which caused an economic meltdown in New Zealand that took ten years to recover from.

Speaking to a 92 year old the other day who lived through the depression of the 1930s, she seemed to think things "were not so bad", her dad kept his job and they were well fed and cared for, so I think we will all be okay whatever happens.

At the end of every downturn is the beginning of an upturn and another economic boom.

Clearly the US and European banking collapses are going to have severe impacts on a New Zealand economy that is already in a dire state, thanks to the profligate spending of the current government, and that is just the way it has to be. There are no free lunches.

My sacrifice over the last 15 years has put me in good stead though. I didn't buy a flat screen TV, I didn't buy another new car, an investment house and all those lovely new consumer goods that others now have financial indigestion from.

I bought items related to productive investment, made my money off them and invested it and I am now in a position to profit from others greed and stupidity.

Unfortunately some of those that took risks are going to be bailed out of their stupidity and greed via taxpayer moola but that is another story. Don't get me wrong, I feel sorry for them but this is what capitalism is about-the exchange of assets for an agreed price.

I have cash ready to buy assets. I don't think the low is going to be reached any time soon but my history of frugal living has put me in a position now when I am excited by the potential bargains that will be put up for sale by those in debt.

I will be looking for more shares and a nice cheap house and will be looking in my home region of Hawkesbay for something.

The Global Market Meltdown @ Share Investor

Strap yourself in baby!
Will the stalactites hold?
Follow the Monopoly Board
Free Market to Pollies: We don't want you
The $700 Billion question: How much will the bailout affect your investment?
Not so sweet Fannie Mae
Financial weapons of mass destruction
Global credit squeeze: There is no free lunch
Current Credit crunch a blessing in disguise
Lenders must come clean over losses to restore faith in credit markets
Watch for dead cats bouncing
Global Market Meltdown: I can smell the fear from here
Warren Buffett's The Intelligent Investor
Global Market's dropping and your portfolio
Global Market Meltdown: What is Warren Buffett doing?
A sensible approach to global market volatility

c Share Investor 2008


  1. I'm not sure if the housing outlook has changed in recent weeks, but last time I checked, prices were being held 'up' because vendors were simply not willing to sell for deflated prices. So they just pulled their houses off the market and rented them out, becoming landlords in the process.

    Also supporting the house prices are first home buyers, eager to get into the game...

  2. Housing is definately overvalued by a reasonable amount Anon. It will be good to get down prices to realistic levels for a change.

    A shame if you have to sell, but hell I have a house, I never saw and never will see it as a an asset but I dont have to sell it.

    I bought it for lifestyle reasons.


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