Last week's stock market decline (correction? free fall?) had the pundits chattering as usual. Much is known in retrospect.I noticed a couple of articles in The Wall Street Journal late in the week that were amusing in a 'Journal of Unintended Consequences' kind of way.
One article talked about how all the effort (and commissions?) that financial advisors have put into 'balancing' portfolios may have resulted in all kinds of assets moving up and down together. This is a great quote from a Thursday piece:
Many investors who thought they had avoided putting all of their eggs in one basket just got egg on their face instead.Another article talks about how the rich are heavily invested in stocks (and hedge funds) and borrowing for luxury goods (presumably against future outrageous earnings as CEOs or investment bankers). And if the market really corrects...they will hurt worse than you or I. Maybe not so much, of course. I read another article about how little (percentage-wise) the really rich give away.
In this house, we find ourselves heavily invested in cash, real estate and bonds at the moment. We have noted that our positions have a reverse effect on the financial markets and call this the P-B effect. You may watch for rising prices in the stock market, a real estate crash, etc. I'm just saying. Meanwhile, take a moment when the Dow plummets (my favorite word) to feel sorry for the rich. We will let you know when we jump back into stock and you can sell then.
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