The Dow Jones industrial average went below 7,000 Monday for the first time in 12 years. $61.7 billion in quarterly losses at AIG seems to have caused this drop in investor confidence. The DOW is now half of it's high of 14,000 in October 2007.
For young folks like me this is awesome news. For those of you nearing retirement age I hope you had other hedges.
Many hedges, much diversification, and a sound pension. But it's still a big hit to a portfolio that I was starting to get proud of. Fortunately because of the pension and some rental and consulting income, I can still retire from LSU early if I want to. I'll still have 12 years until I'm 65 to keep working at something else, so I have time for the portfolio to come back, too. I'm still buying undervalued stock when it takes a big dip and I buy precious metal on almost every downturn. Youth won't save you forever. You can take the same kind of hit when you're in your 50's. This won't be the last economic downturn or market crash. Diversify madly and start second and third income streams. The inflation resulting from the national debt will result in increased inflation rates for you guys in 30 or 40 years. Inflation hedges, like paid-off property, helps so it's never too soon to pay off mortgages early and then buy a fishing camp or some timber land and pay it off, too.
AIG's stock is up today. AIG lost $60B in the 4th quarter because of the market, not vice-versa. AIG has a Trillion invested worldwide, and their losses are due to the same factors that have decimated our own personal investments. AIG has valuable assets for sale (which proceeds will go directly to the Fed) but it's a buyers market and they don't want this to be a fire sale. The Commercial Insurance business (where I am), I understand, will become autonomous, with it's own management and BOD. We are regulated, well capitalized and more than able to honor commitments to policyholders and to pay claims.
The remedy will be more of what caused this...Socialism here we come. Can't wait to find my teat to suck on, hell, i've been working too hard. I'm gonna kick back with some chips and dip and catch up on my Jerry Springer.
Can't argue with most of this except the precious metals. They have a very poor long term track record. Gold has a historic return of about 4%, and I can do that in money markets most years. I'm not one to get involved in commodites because of the volatile movements. I'm sure this won't be the last market downturn, but for now I'm all equities. When we return to some normalcy I will return to a more natural mix. Zig when they zag ninja.
After watching AIG 4Q and newest up to $30 billion in more aid I knew I would see SF here galloping how stable AIG is.. :lol: Made my day SF. *I had to login to say that.. haha
It's a hedge and just a part of a diversified portfolio. Like all commodities, you have to watch the trends carefully, but gold has been berry, berry good to me. It doesn't compete with stocks for long-term growth, but it often holds value when stock pries are plummeting and almost never crashes. It's good to have some in the mix. When you get older, high-risk stocks lose some of their appeal. I know that since Since April 2001 the gold price has more than tripled in value against the US dollar. According to Wikipedia:
So . . . the insurance side will honor commitments to policy holders while the investment side tanks along with its stockholders?
