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Thursday, October 16, 2008

I choose to leave the blood sucking to the bloodsuckers ...

I'm just a mainstream nest-egg investor. I never tried to make a killing; I have always been, and continue to be just a conservative allocator of assets (stock and bond mutual funds, as well as fixed income investments covered by FDIC). My goal has always been to balance a not-excessive amount of risk with a desire to at least keep pace with inflation. You might say my motto is "Everything in Moderation". It suits my personality, which places a high premium on sleeping well at night, most of the time.

Now that I am retired, I am more inclined to offer advice than I had been before retiring, when I felt I had much more to learn than to teach. With these general statements about "where I am coming from" I offer the following advice to anyone whose philosophy of personal behavior and accountability is similar to my own.

These are extraordinary times. These are very dangerous times. When it seems like everyone around you is running around like a chicken with its head cut off (which I actually witnessed when I was an impressionable child) you must make a great effort to think as clearly as possible. I will focus on the most chaotic situation facing most of us today — the investment markets.

For simplicity, I liken the extraordinarily volatile markets to a buzz saw, which is being operated by diabolical manipulators who are out to shred the little guys like me. Don't let them.

If you have sufficient emergency funds (i.e., your FDIC-covered money) to see you through the current shit-storm, get the f*ck away from the buzz saw; as far away as possible. If not, your investments will be shredded and consumed by the short-sellers and the hedge-fund gunslingers. You don't stand a chance against those pros, who live by the gun (buzz saw).

I have heard it reported (I never listen to him directly) that guys like Cramer were recently begging anyone who was listening, to convert everything to cash (i.e., join the panic sellers). To me, that is exactly what you should not do. Perhaps that would have been a good thing to do, say, a year ago. But you know what they say about hind sight. Hell, my own hind sight is just as good as Cramer's; and equally valuable.

If you sell during the buzz-saw panic, you are capitulating any hope of ever recovering any paper losses. The little guy does not stand a chance against the buzz-saw operators, who make most of their money from shredding the little guys and the rest from shredding each other. I choose to leave the blood sucking to the bloodsuckers.

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