Thursday, December 11, 2008

Financial Forecast - Cloudy with a chance of Sun

Well, most of the world has been worrying over the current economic situation. Not that it’s not a worry, but it’s a worry that we can’t do much about... The sky isn’t really falling and we will eventually muddle our way out of this, individually and collectively. But lately I’ve been thinking about it this way, and oddly enough it’s a piece of literature that taught me this little bit of advice, but it seems to be accurate. In Gone with the Wind, Rhett Butler said that there were two times to make a great fortune, during the building up of a society and during its downfall.

Now, obviously, the current economic crisis is not equal to the devastation of the civil war, but theoretically it is sound. Look how many people made their fortunes from the building of technology, during the rebuilding of society after World War II, and so on. So, what I’m thinking about is looking into stock trading. I don’t claim to know much about it, but logically I do know that many stocks have fallen to prices we haven’t seen since the fifties. Theoretically, I could find an online broker, invest a little money, little enough that it won’t kill me to lose and that I won’t have to touch for the foreseeable future. Providing the companies I pick don’t flat out close, when the economy rights itself, it should bring back a good return on my investment.

Like I said, I don’t know a great deal about online trading, but I think, so long as the principal I invest is low enough that I can live with the loss, it may be a good time to learn.

How about you guys? Is the economy shaping any new investment ideas for you? Is it changing the way you write or look at your savings or budget your groceries? And is that all bad or can you see some good coming out of this in the long run?


Mary Witzl said...

Most middleclass Americans (and I include myself) live in such a world of plenty; I see the current slump as an opportunity for us to learn to appreciate our good fortune and not to expect be be surrounded by infinite resources. Hope that makes sense...It is a lot harder for those among us who have known nothing but poverty. I hope that this will leave my kids with a valuable lesson: that just having work, running water, and access to decent medical care are small miracles in this world.

Rhett Butler had a point, but making a fortune and establishing a good reputation are two different things. The Bank of America in San Francisco had a bad reputation even 70 years later because after the 1906 earthquake, they forced impoverished EQ victims to sell what was left of their homes. I can think of restaurants in L.A. that had great reputations: during the Depression, they fed the hungry for free. I would always patronize those restaurants, but I've never forgotten that post earthquake story about the B of A.

Merry Monteleone said...

That's why my mother hates Bank of America. She never said why, she just said they were from out west and they are shady... 100 years later, and they'll never live it down.

I agree with you, Mary. I would never make money at someone else's expense... though investing in stocks doesn't seem to be at someone else's expense. I know people lost money, but if they keep those stocks and ride it out, maybe they can make some of it back...

There are a ton of programs out there for people to buy up foreclosures and tax leins... that I could never do. It doesn't matter that the bank owns it or that the previous owners are already out - I'd still feel like I'm picking the bones of someone who's had a hard time. If I ever had that kind of money, I think I'd buy up tax leins to give them back to the people who're having a hard time paying them... so many times you hear of it being an elderly couple whose house is paid off but they lost track of the taxes, or the one who did the finances passed and the other didn't know about it... or they simply couldn't make due on a fixed income.

SUV Mama said...

You had me, until the bank owned thing. The house I own in Colorado was a bank owned property- because the previous owner skipped out of town in 2003 and is now in some South American country, evading charges in the U.S. And you know what? I STILL would have bought the house even if it had been a forclosure. And if that means I made money at someone elses expense (still fail to see how that is) that's LIFE- not me having bad moral judgment.

I have worked in the forclosure market when I was a young college kid. I was an intern, and my job was "trustee sales". And this was during the booming 90's. I had sympathy- but after time I heard enough "I didn't know" and was simply frustrated at people who chose NOT to pay their mortgage- for whatever reason. Not every reason is "I was in the hospital" or "my kid has cancer". Sometimes it's "I went on a shopping spree and have a car I can't afford and I expect YOU to support my bad choices".

Sorry, but I Do NOT feel sorry for the MAJORITY of people who have lost their homes. WHY?

Because MY family makes MORE income than most- and we are a one car, paid for car family. Other people who make FAR less are driving pimped out mini-vans and cars loaded to the hilt and they pay $700 a month car payments and buy clothes they can't afford and then WHINE when their mortgage is too high- it's EVERYONE ELSES fault- not THERIS! IT was the loan brokers! THEY MADE ME DO IT!

I, for one, am SICK OF IT. If you can't read, don't buy a house. Is there corruption? YES. I don't believe it's as prevelant as people think. I think that it's a myth they want you to believe so that you don't hold THEM responsible for their crappy choices.

We've tried to follow a debt free life (except for our mortgage) something that is UNHEARD of unless you are a Dave Ramsey fan or happen to have strong values that don't include paying for Christmas presents on a credit card.

I SHOULD be rewarded for my choices- you reap what you sow.

The house I'm looking at here is a bank owned property. Do I feel bad for the previous owners? I don't know them! What a waste of energy. It's a HOUSE, it's for sale, and I want to buy it. I'm doing them a favor, actually, because whatever the bank sells the property for goes against their debt obligation (just because a house is forclosed on doesn't mean you don't still owe the bank money).

Personal responsibility- it is completely wasted and I guess it doesn't matter. The government bails everyone out, people are rewarded for bad choices, and we're all supposed to feel sorry for them. Those of us who pay our bills on time and get mortgages we can actually afford are just "lucky", I guess. We must have earned it at someone elses expense somehow, right? Except that's so insulting to me I want to cry.

I agree with Mary- I want my kids to know that running water, decent medical care, and FOOD are small miracles. But I also want them to know that earning a profit isn't evil.

I could go on, but it's your blog. I'm just really sad that life has come to this. There is socialism, and there is communism, and we're so far over the edge that I wonder how we'll ever get back to a place where we actually believe in our fellow man instead of trying to rescue him from himself.

SUV Mama said...

PS: Merry, if you could email me your email address I can add you to my blog readers... :) Thank you! thesuvmama at gmail dot com

pjd said...

Wow! I am not sure I can follow a rant like that. [points up the comment trail]

Merry, if I understand, I think what you're saying is that "buy low, sell high" is a solid philosophy in investing. And many stocks now pretty low, so it's a good time to buy. If you can afford to buy.

The way I interpret Rhett's quote, though, is that scoundrels can prey on other people's hopes or fears during times of great change. There is a huge difference between preying on someone's fears, and buying low.

And, of course, even though this is a time of great change, not everyone who makes money is a scoundrel. And not all low stocks are worth buying. Not all that deserve to go bankrupt will, and not all those who deserve good fortune will receive it.

Good luck, should you jump in.

Merry Monteleone said...

Hi Peter,

I actually did respond to SUV, but then realized my comment back was more personal than I'd like to be on the blog, so I emailed it to her instead.

I never realized paid postings could be so heated, though.

Oy, okay, I get what you're saying about the Rhett line, it wasn't an exact quote, I believe he said that during the building up of society you make money slowly, and during the destruction you make money fast... I don't think there was a variable on what type of person you were to make money. Certainly, there are people who make money by taking advantage in both time periods... there always are.

I think changing economies and societal structure also means that there are avenues for new growth in areas people previously missed.

My point in the post wasn't to say, "Hey, it's an economic upheaval, you can make money by screwing people over!"

The point was, periods of great change are scary because it's a reminder that you have little control and the unknown variables are unsettling. But, if you adjust your thinking and look at things in a more optimistic light, you might find avenues of growth you wouldn't have noticed before.

That's it. It was a light post. I don't actually care how anyone else makes there money, as long as they're not robbing me :-)

Merry Monteleone said...

Oy... that was supposed to be, "makes their money..."

honest, I am edjumacated.

Hi! I'm Grace said...

I just came here six months ago, and I'm sad that there is an economic crisis here nowadays. I don't lose hope though. There will be hope for USA by God's grace.

Merry Monteleone said...

Hi Grace,

I love that name, by the way.

You are right, it works in ebbs and flows, and in the long run I think we will all be alright.

Welcome, by the way! I just stopped at your blog to visit. Your writing is great, and I love your layout.

Anonymous said...

First And Formost The Bank of Italy, now Bank Of America, set up a frigging table to help the people of the quake by giving immidiate loans within days of the disaster. Is it thier fault people didn't pay those loans back, I think not. I'll tell you what don't pay me back on one and lets see how that one plays, If it aint my rightfull property then what should I take. Good grief everyone makes Shakesperes shylock to be the bad guy but all he wants is his due. a frigging deal is a deal, My favorite moddo is: You made the deal. Hence you should live by it even if it Sucks for you in the long run, HAVE SOME F###ING HONOR>

Mary Witzl said...

Oh wow, Merry, I should have come back here earlier to read all of these interesting responses!

I find myself agreeing with a lot of what SUV Mama has said: my husband and I are both fearful of spending more than we make and have almost never taken out loans. We know a couple of Big Spenders who are now suffering badly; we also know people who've bought foreclosed properties (one of which was owned by a rather irresponsible previous Big Spender) who could not have otherwise have afforded to buy. I don't necessarily think that buying a foreclosed property is a bad thing, but there are people who wouldn't think twice about doing this, no matter what the circumstances. I'm not dissing the honest workers who handle their money carefully, but I have little respect for the callous sort who would happily make a buck off others' genuine misfortunes.

And Anonymous, I wasn't around back then, but I've heard about the interest rates on those immediate loans from the children, grandchildren, and great-grandchildren of the 'benefactors' -- they practically tore their hair and cried. I could not count the number of times I have been begged not to patronize the B of A, and all because of what happened over 100 years ago.

Merry Monteleone said...

Hi Anon,

I get the whole 'getting annoyed' thing, but swearing in capitol letters isn't a great way to get people to take you seriously.

I looked into it a bit, though, I hadn't heard the 'quake / bank of america' thing until Mary mentioned it here.

here's one from geotimes, oddly enough


I couldn't find anything on the rates being unaffordabley high - can you find me something on that? Geotimes seemed like a good article, I found a few others but none of them indicated that Bank of Italy (anon was right, they didn't become B o A until much later) did anything wrong - in fact they made a point of saying this bank was the only one at the time that would extend loans to the working man... most banks wouldn't...

Sorry, I had to look, my brother called me up after reading the post and told me it was 'irresponsible' of me to leave my comments this way without checking sources and making a statement about it... For his reference, I'm not a journalist and this debate wouldn't have interested me much if you hadn't called about it... I'm a fiction writer, you know - the profession where you make shit up for a living? yeah, that one.


Besides the bank of america thing, I totally agree with you. I can't make money off the backs or misfortune of others. I'm not making a statement about what anyone else does, and anon does have one point (though arguing Shylock was right on a writer's blog is a little ludicrous), but there is personal responsibility from the person taking loans etc... that still doesn't mean I want any part of taking advantage.

There are plenty of honest ways to make money that don't hurt anyone else.. and a few that actually help somebody.

Mary Witzl said...

(Now I feel irresponsible -- I desperately want to furnish a name or a good source for this prejudice against the B of A, but I cannot find one -- tell your brother!)

I can say that the at least half of the people who told me this story were of Italian descent, and all of them were working-class. I remember a girl in the dorms with me who didn't tell her parents she had an account at the B of A, so strong was their feeling against the bank and their interest rates. And yet I remember hearing that story about the produce too...

-- Mary, another irresponsible writer of fiction. (But if you go to San Francisco, ask around and you will hear the same story. Many, many times over...)

Merry Monteleone said...

Hi Mary,

Don't worry about it! I've more than once relied on anecdotal evidence, and often it's lost to the history of things because people on the low end don't tend to have any say in the records of their time. So it's possible these family accounts are accurate, but it's just as possible that the immigrants, Italians or otherwise, that took these loans then found them too hard to pay back, even if the rates were fair. They may not have accounted for the loss of wages due to the many businesses not running for the length of the rebuilding phase, etc. They also had likely never paid back debts before this, and had lived solely on what they earned, not buying anything they didn't have the money for at that time. Many people find debts harder to pay back than they anticipate the first time they take out a loan. It's hard to judge what you'll be able to afford on a regular basis for a long duration, harder still when your future income is uncertain.

There are also many cases of B of A rates questions over the history of the bank, and questions on ethics of their officials much later in the 20th century - though none of those can really be attributed to the original owner, which is where this story originates. Without evidence that he, himself, purposely set out to take advantage of these people, I'd have to say it's slanderous to indicate it was the case.

But I don't blame you for your comment at all. And I don't think either of us is irresponsible.

My blog is generally about fiction writing, but I don't arbitrarily post things that are not credible on the blog. I generally check my sources on anything historical, though not necessarily anecdotal... and I'd be happy to make a correction publicly if someone showed me where a statement of mine was innaccurate (not their opinion, mind you, my actual statement). I've been following your writing for a long time and I find you to be credible and responsible in your writing (as anyone can see even in your return statement).

As far as accuracy, that's a personal responsibility that I take on myself because my name is on this blog, it is a professional blog, and if my readers are to trust me, I can't go off willy nilly making up any old thing (unless it's an actual fiction piece - and even then there are rules for research). But there is also reader responsibility. You can't use a blog as a credible source to form your opinion or gather facts. A jumping off point, maybe, often I'd guess as look how much we've learned here that I didn't know before.

Anyway, thanks for stopping back in. I'm kind of glad you couldn't find it either, I thought maybe I was missing something :-)

Chris Eldin said...

Merry, I'm reading the book "Outliers" right now and it speaks a bit about what you're saying here. It's a very interesting read. I agree with you. But, you're assuming the new economic world order will be the same as the old. When somebody like Warren Buffet banks on an assumption that the market has reached bottom, and hasn't, and then loses a ton of money...

I agree with your premise that a time of great change can create great opportunities. But I don't know if the stock market is that place. But I don't know or can't even brainstorm what is.

Great discussion though!!

blogless troll said...

I wouldn't go anywhere near the stock market for a while. Wait and let things shake out. The Fed just cut rates to zero, which is like shooting your last Nerf dart at a charging rhino. This is a great time to learn about stock trading without actually putting money at risk though. When things do turn around the stock market is not going to skyrocket right back up. There will plenty of time to get in. Don't jump in too soon. Don't try to guess the bottom.

Merry Monteleone said...

Hi Chris,

I agree with you - there is bound to be some new developement economically that will lead to great successes for the few the jump in. There always is in times of economic rebuilding - but it's hard to know where to look. Hind sight's twenty twenty, but it's harder to determine what's coming down the line.

Hi Blogless,

That's good advice. I was thinking more like a small amount, that wouldn't hurt me at all to lose... likely it wouldn't gain a great deal either, but I'm not a gambler at heart and I never play with money that I can't do without.

sexy said...
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