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« The Right Stuff | Main | Can You See the Light? »
Monday
Dec292008

Ready or Not

Happy New Year Clock Icon"Ready or not, here I come."  With that childhood playground cry, here comes 2009.  For many it cannot come fast enough; they welcome it with open arms.   2008 has been a challenging year for a number of reasons, not the least of which is the way the market treated us.  Not since 1931, when the S&P declined 43.3% have we seen such a market.  Although there are couple of trading days left in '08, it appears that this year's decline will approach that of 1931.  There is simply no way to paint a pretty face on that.  Watching one's savings, accumulated over years, evaporate in mere days is painful, even agonizing.  This is especially true for those of us already in retirement or for those of us plotting our exit from the work place.  This year's market activity has encouraged millions of us to rethink our plans, retirement and otherwise.  It has also likely changed the way many will view stock investing in general, and will keep them sitting on the sidelines with their investable dollars.  This will likely mute any future recovery.  However, this may well work to the advantage of those of us who consider themselves "long-term" investors if it hampers the activities of those John Bogle calls "the speculators."  With this type of year passing there will doubtless be plenty of analysts recording all of its woes.  Thus, I decided to see if there were any "good things" to record about this beleaguered year of 2008.  Of course I experienced many "good things" personally during 2008 such as good health, the love of friends and family, and safe travel, but I want to focus on those things that we experienced as a nation.  I had to do some searching, but I found a few things to offer.  No doubt you can suggest others, but these are a few that came to my mind. 

2008 began with the best Super Bowl of all time.  With Eli Manning at the helm, the New York Giants beat an unbeaten and heavily favored New England Patriot team 17 to 14.  In the closing minutes, Manning executed the drive, highlighted by an impossible reception by David Tyree, that sealed the deal.  My Super Bowl gathering saw all of us on our feet, screaming wildly at the television as the game ended.  It was exhausting just to watch, but what a game!  Even the halftime show, featuring Tom Petty and the Heartbreakers singing Free Fallin, was one of the best ever.  It was a great start to 2008's sports season.

Then there was Tiger at the 2008 U. S. Open held at Torrey Pines.  There will never be another Tiger Woods, and there will never be another U. S. Open Tournament like 2008.  This one went into overtime as Tiger and Rocco Mediate had to play another 18 holes on Monday to determine the outcome.  Even on Monday the lead changed a couple of times, but in the end, as all of us knew he would, Tiger prevailed.  Rocco played brilliantly, and many were hoping he could pull it off, but it was Tiger Woods he was playing after all, and it ended as if it had almost been scripted.  What made it even more amazing was the fact that Tiger was playing on a severely injured and painful knee that required surgery immediately after the tournament.  Even that was not enough to defeat Tiger however, as he willed himself to victory.  It was truly a performance for the golf ages.

Then there were the Beijing Olympics.  It began with an outlandish and beautiful opening ceremony and finished with Michael Phelps winning eight gold medals in swimming.  He won every event he entered; another one for the ages.

2008 saw some wonderful advances in medicine.  A new and effective drug to help smokers quit was introduced.  New drugs to combat high cholesterol, heart disease, and depression arrived in pharmacies, and U. S. pharmaceutical companies continue to lead the world in developing new drugs that increase the quality of our lives.

In the 1960s Jim Crow laws still existed in a few states across the South that prohibited African Americans from exercising their right to vote.  This year, less than 50 years from the existence of those laws, the United States elected a black man as president.  This has got to indicate something good about our country.  We do not know as yet exactly what kind of president Barack Obama will be, but his election has introduced new hope for the future in our citizenry, and I believe that he will be able to  capitalize on that hope to help America emerge from this recession as a more financially sound country.  I surely hope that he can as the whole world is counting on him. God bless him as he tries.

Because 2008 has seen so many challenges, 2009 will have less work to do to improve.  The table has been set for the years ahead.  A market recovery of some sort is very likely in the offing.  Historically the market has rallied shortly after such a precipitous drop.  The current 10 year annualized return for the S&P index is -1.75%.  This is an amazing number; it is the lowest 10 year return since 1926.  For those of us who believe in the principal of "reversion to the mean," it means that in the coming years the market is set up to advance nicely.  It also indicates that many fine companies are selling at fire sale prices.   I read somewhere recently that nearly 10% of the stocks listed on the NYSE are selling for less than the money they have on hand!  The time will eventually come when the stock prices of today will be seen as having offered a screaming bargain.

Warren Buffet surpassed Bill Gates as the richest man in America in 2008.  He is again leading by example, by both giving generously to Gate's charity, and advising others to be buyers in this market, as he has been.  It has paid rich dividends in the past to do as Warren is doing.  Mr. Buffet warned us that some of our current problems were approaching; we should have listened to him.  He is also an advisor to our new president, and he can certainly be viewed as one of the good influences from 2008.

Finally, 2008 taught us some truths we may have forgotten: 1) greed is bad; 2) bubbles are bound to burst; 3) all asset classes will go both up and down, even real estate; 4) debt is usually bad; too much debt is ruinous; and finally 5) money is not everything; it is only a small part of a small part of things.

Get ready for a slew of predictions about our coming new year.  Some of them will prove to be right; many of them will be wrong.  Those that get some right will simply be lucky, not any smarter than you or I.  Be especially wary of any prediction by an economist; they can't even tell you which way interest rates are going, much less what will happen in the economy.  The only prediction that I will offer was made long ago and has proven its validity over and over.  It comes from Proverbs 11:25, "The generous soul will be made rich, and he who waters will also be watered himself."  So be generous and have a wonderful 2009!

Fly/Drive Safely

29 December 2009

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  • Response
    Response: Updated Focus
    Nice read, I just passed this onto a friend who was doing some research on that. And he actually bought me lunch since I found it for him smile Thus let me rephrase that: Thank you for lunch! "Never let inexperience get in the way of ambition." by Terry Josephson.

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