Tuesday, September 30, 2008

Advice

Save, save, save!. I'm going through every single expense to figure out what can be cut.

FDIC insured and Treasuries for all non-tax deductible short to medium term investments is where I am headed.

6 comments:

Anonymous said...

Isn't saving the wrong way to go. The market needs money and if everyone were to save, there would be no money in the market, hence a collapse of the market. If we put money in the market, we help it stay afloat. Isn't now the time to buy. Buy low, sell high??? I would think you would be encouraging buying and spending. Not spending stupidly, but also not stashing all your cash and watching the world fall apart.

PassTheChips said...

I don't think we've seen the bottom. Not anywhere close. Buy low, sell lower is not something I'm willing to do for my short to medium term investments. Retirement accounts are a different story.

If $700B isn't going to keep the market afloat, neither is my money. I'm more worried about what is going to happen to my family when inflation and unemployment inevitably begin to skyrocket. Spending what you could save right now is a bad idea. Spending what you don't have right now is a terrible idea.

Anonymous said...

You are correct. Spending what you don't have is a terrible idea. You are also correct that your money alone will not keep this market afloat.

However, if everyone listens to you and save, save, saves, the market will continue to spiral downward. The market needs money. Your $10 you spend at Walmart instead of saving will make a difference. Others will see that the world is not ending tomorrow and they will spend their $10 at Walmart. Then the investors come in, look at Walmart's statements and see that Walmart is still making money, in fact they are making a profit. Investors will invest their big time money in Walmart and that in turn helps the market turn around. This in turn will keep inflation down and people will still have jobs.

So, you are correct that your small money will not make a drastic difference, but if everyone(all five of us) who read your blog listen to you, we will be contributing to the collapse of the market and not helping it.

I do concede though that it is more than just saving that is affecting this market, but we can all help. You can save and spend at the same time. It is very similar to voting. Does your one vote really matter? Does your mezzly $10 matter? I would argue that it does.

PassTheChips said...

Damn you anonymous posters (wheels).

My next post will be titled "Spend, spend, spend". My mistake was in sharing what I'll be doing (even more aggressively than I already do) rather than what I'd like you all to be doing. Thank you in advance for the free ride and economic recovery.

We can't spend our way out of this crisis. That's how the country got into this mess. The entire paradigm of anyone or any entity being able to get credit must change. A massive correction in who can borrow, the cost to borrow, and overall prices of inflated assets must occur. Getting away from fiat currency and onto an adjustable fixed currency would be nice as well (think Bretton Woods I with periodic adjustments). Anything less is just a band-aid.

John said...

There are still opportunities to aquire wealth in the current economy. When the market is up, ride the momentum, when it is down, turn to spending/investing your dollar on items that result in stable wealth acquisition. You already mentioned Food, Gold and Oil in that order. Add in Natural Gas and other proven energy sources and you can insulate yourself.

The next step is knowing the right time to get out of Food, Gold and Energy and buy low on the remaining market items. I will make that move when borrowing starts to become easier, when housing supply and demand evens out and when food sales begin to level off or decrease.

I'm guessing this downturn will take years to sort out in financial markets. We're already at one year of bad news with at least another in our sights.

But no matter what PTC says, I'm still gonna buy Rockband 2.

Bubba said...

I'm going to have to side with Chips on this one, because saving not only helps you personally out, but if you're saving that money in a bank it gives them more capital to work with, allowing them to grant more loans...

One of the biggest reasons WaMu went under is because people were pulling out all of their money in the days leading up to the collapse (nearly $17M).

Oh, and RB 2 is well worth it's weight in food, gold or oil.