Fear of Clowns

"Faith may be defined briefly as an illogical belief in the occurrence of the improbable."
- H. L. Mencken
gozz@gozz.com

Thursday, October 09, 2008

Fear and panic on Wall Street 

Although I've been avidly watching American and World stocks tumble, I've already noted that daily ups and downs are driven by investors concerned whether they'll make or lose money in the immediate future - as in days or weeks. Certainly, there's a sharply pronounced downward trend, but as it's been so short lived so far, all one can gather is that the collective opinion of large investors is that we have rough months ahead of us.

Still, while sharing that perception I'm personally seeing this as a time when stocks are "on sale" for people like me who plan on cashing in in 25-30 years instead of a few weeks or months. If anything, I'll increase my contribution to my 401K - which is entirely stocks. I think about it this way: in 25-30 years, an investment I make today in an index fund will have gained the same value as if I'd bought it in early 1999 or early 2003.

At the same time, economic problems are quickly bleeding into just about every part of the financial sector, it may be a long, tough ride. The worst-case scenario that rolls through my mind concerned how interconnected all sectors of the economy are. Things we need for survival like dairy farms, power plants, and modern medicine rely on computers and machines made and maintained by companies that depend on dozens or hundreds of of other companies. If one link in the chain fails, the whole system collapses and I'll move to rural Kentucky and grow my own beans and potatoes. I do wish people other than Bush appointees were guiding the ship.

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