Tarps Wholesale

Tarps Wholesale

Great News Today & Some History Too

I’ve just received my Master Practitioner Strategist certification in Neuro Linguistic Programming, learning all kinds of wonderful facts, which I will continue to share with you over the coming weeks and months.  For example, did you know that information flows into our minds at a rate of 2-4 million bits per second, and yet we can only digest 134 bits per second?  That means that the overflow of information floods our minds at a similar speed of water blasting from an open fire hydrant.  We “filter” what actually enters our minds by deleting information that doesn’t make sense, distorting information based upon our beliefs, and/or by generalizing.

With that in mind, and some facts to back me up, let me assure you that the media has over generalized and grossly distorted nearly each days’ news these past 3 weeks, with the positive facts coming to light on the days following their actual occurrences.  Specifically, on the initial days of the wide point spread gains and losses, only 1-2 days afterward were we served up the actual percentages of said swings, which were far more spectacular in terms of being able to frame this activity; the percentages were far more noteworthy relative to historical percentage swings.  To herald that these were the “biggest point swings ever” was true, yet NOT helpful information to the investing public insomuch as the percentage drops did not warrant such 24 hour, edge-of-the-chair myopia.

Everyone has a task; the press is excelling at theirs.  They’ve captivated the attention of people who never even knew what the DOW Jones was a year ago.  Let’s now loosen the juggernaut they have on our minds and attention and think about our individual responses to this financial situation.

It’s been said you can’t buy happiness.  Happiness currency is always liquid, always available to those who deal in it daily, or those who dare to learn to deal in it daily.  It’s our choice.  We owe it to ourselves to marshal our own resources, when those outside our control are less predictable, and captain our own ships, especially when the waters are turbulent.

Well why do we automatically connote or measure happiness in available financial currency then?  Why are we myopic about what our investments total each and every day end?  We need to understand history a bit better because I think it was Mark Twain who once said, “History may not repeat itself, but it’ll surely rhyme”.  Historically we’ve endured depressions and recessions and voila, there are people around—real people—who lived through it.  How did they?  Often with stories of personal fortitude and community support.  The great depression is a time that will remain singular in scope and magnitude in my opinion; we aren’t anywhere near the financial calamity of the great depression.  Nor do I think the current financial situation is permanent, or will take decades to extricate ourselves from.

Here’s some of the facts courtesy of Dimensional Fund Advisors, an institutional asset management company whom I utilize in Santa Monica, CA:

We’re now in the 10th bear market in past 50 years for US Stocks (defined as a peak to trough decline of 15% or more in the Standard & Poor 500).

From October 9, 2007 to Oct 15, 2008 the Standard & Poor 500 has dropped 39.53%.

 

By comparison, previous bear markets, their percentage drops, and the durations follow:

 

• March 2000-Oct 9, 2002 dropped 49.2%  lasting 28 mos

- (Bill Gross was quoted as saying “Stocks are nowhere NEAR their bottom” in September 2002)

• August 25, 1987 – December 4, 1987 decline of 33.5% lasting 3 months.
• January 11, 1973 – October 3, 1974 dropped 48.2% over 23 months.
• November 29, 1968 – May 26, 1970   36.1%  over 18 mos
• December 12, 1961 – June 26, 1962  28% over 6 months

In each of these cases the markets recovered and paid huge dividends to those who stayed the course.  Amidst vein-popping newscasters and financial prognosticators, these investors held their ship wheels steady, refusing to be buffeted about by unnecessary noise.

Earlier “unprecedented events” include, but aren’t limited to:

 

• Highest interest rates in 150 years occurring in 1981
• Y2K planning was immense yet that whole era is hardly memorable now
• Dow fell 17% after 9/11 and recovered
• SARs virus in 2003 threatened to bankrupt the globe but didn’
• 2002 Stocks gain 969 points in 4-days Oct 9th low, then biggest 4-day gains since 1933
• March 2003-investors bought fixed income locking up lowest yield in 44 years, when equities were clearly the lowest price asset and “best buy”.

I’ll bring you the GREAT news of today to save you tuning in:

 

1. Social Security’s cost of living benefits were announced today resulting in a 5.8% jump in payouts to over 50 million Seniors effective January 1, 2009, boosting the average monthly check from $1,090 to $1,153.
2. The credit crunch has already loosened, proving that the “bailout” plan named TARP—Troubled Asset Relief Program—is beginning to work.
3. Gas prices are continuing their decline.  Every 1 cent drop in a gallon of gas results in a BILLION dollars in potential Consumer Spending, 2 cents translates to two billion dollars in spending…you get the point.  We need consumer confidence and spending, so this is great news.

The discipline in all of life is either to act when action isn’t totally necessary; i.e., to buy insurance before we need it and/or to buy securities when “the world” is running for cover.  These two actions appear somewhat counterintuitive yet are essential to long term success.

And what is the most successful stock picker in history doing today?  Buying stocks!  (Not that I am recommending buying wholesale today however, as it would certainly appear that questions still need to be answered and market volatility will surely continue.)  However, Warren Buffet is indeed buying stocks, along with a bunch of other investors too, else we wouldn’t be up on the day 154 points on the DOW, after the dire predictions and tickertape along NYC streets this morning reading STOCKS DIVE, even before the market opening.  ‘Nuff said.

 

About the Author

Debra is a sought-after international motivational speaker who is passionate about empowering women to break out of their white-knuckled fear and paralysis about their finances. Women will learn easy tips to manage their fears-including that of becoming a bag lady -- thereby increasing both their net and self worth.

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