Hunker down or take action?

As I opined yesterday, these are calamitous times for all of us, caused mainly by the on-going financial meltdown. Predictions of even worse times to come, give one pause to ask, what should I be doing?

There is a natural inclination to hunker down, to take to the fox hole, or head under the table and cover one’s head and not to look up until the noise dies down. One is taught to run to the basement and hide when the storm comes and this surely is a financial storm if monumental size and potential consequences.

But, what are the alternatives? Well one could sell what you have left, go to Las Vegas and put it on a number at the roulette table. Or, one could cash out of the markets and take the cash and hide it in the mattress. Neither alternative sounds convincing as a winning strategy. But, perhaps this is not a zero sum game where there has to be a win or lose strategy.

There are times when “do nothing” is bad and could even get you killed – standing on the tracks as a train approaches come to mind; however, other times doing absolutely nothing may be the only way to survive. This may be one of those times. Running around trying to figure out where to move your money to avoid further losses may only benefit those who make money every time you buy or sell stocks (those same wonderful folks who work for the companies that got us into this mess to begin with). To my way of thinking that would be very much like market timing, which I have been repeatedly advised not to try.

Just about anything that you do at this point to try to make things better also has about a 50-50 chance to actually make it worse. So let’s all head to the basement and play a few rounds of Monopoly, which is the only place where we’ll have a chance to make money for a while. To those saying that you should be doing something; ask, “What?” Then spread a little salt on the floor and listen to the soft shoe routine going on in front of you. If the person telling you that is your broker advising you to start selling and buying a bunch of things; remember that he/she is the only one that will make money off those moves.

If you are still overwhelmed by the urge to do something; then gather up all your money and come see me. We’ll go out a buy a bunch of foreclosed houses together. You can get some great deals right now. You’ll feel better and I’ll certainly feel better, but your broker and financial advisor will be really PO’d. You can find me hiding in the basement.