For many years I have argued that American's are living beyond their means and that that situation could not go on forever. But it kept going on and on and on.
Until this week when the Dow finally fell below 10,000... Is it actually unravelling now? Is this it? The big correction?
The past month, especially the past week, have been pretty unreal and I find myself feeling unprepared.
Our investments were well diversified and in good companies and funds. We did the "right" things and yet I saw our saving plunge day after day after day. I tried to be patient and not try to time the market but I just couldn't take it anymore. I cried "Uncle!"
One of the rules of investing is that if you cannot sleep at night, you make a change. I wasnt sleeping so yesterday we cashed out and sold almost all of our investments to keep cash. I didnt' want to do it, I really didnt, but after I put in the orders, I felt a wave of relief.
If this is like my previous attempts to time the market (like buying gold at $1,000), my sales will mark the recovery in the market so start buying! :)
But even brokers are talking about Dow 9,000, Dow 8,000 or a return to the long-term number, Dow 4,000. Folks are talking about the end of an era. And those are the GOOD scenarios.
There are a few folks quietly saying that our entire financial system is now bankrupt due to unregulated (and unmeasured) debt instruments like credit-default swaps. Trillions of Dollars worth of paper that could swamp the assets of all normal financial companies...
What a month.
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