Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (3) | Ignore Thread Prev | Next
Author: yttire Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 5076  
Subject: Financial update first quarter 2009 Date: 3/28/2009 10:58 AM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
The economy continues to unravel, but our financial picture if we keep our jobs is stable. This is primarily because most of the money was moved out of the market in the middle of the crash. A percentage was moved back in in parts while the DOW was below 7,000, although this may have been wise, it may have been foolish. Of our retirement assets, they straddle stocks with about a 50% position. The DOW is now trading around 8,000.

Our overall economic position is up 6% for the quarter (24% nnualized!) but this is in large part because of back pay owed to both of us that was realized this quarter rather than due to any investing acumen. The real threat to FIRE at this point is the lack of available investment vehicles which will get some real rate of return. Inflation seems probable, and corporate growth will undoutably be diminished for many more quarters. so we are looking at several (many?) years of no obvious growth vehicles. A good trader could undoubtably do well in this situation, but that is very luck driven.

We now have a 5% of total assets in gold as a possible inflation hedge. Of course, gold is at a high at this time, so may already have priced in a good amount of potential future inflation. This position may not really be a strong one because of this reason.

The future of the assets for the next few quarters looks good merely because there is much more back pay from years of work which will show up in the accounts in upcoming quarters. However, it is nice to see a graph which reflects a "bounce" after severe losses, especially against a backdrop of a stock market which still fell heavily this quarter despite its recent comeback.

Paying off the house in the upcoming quarter seems a certainty to reduce forced cash outflow with a guaranteed rate of return, which would be a good buffer against either of us losing our jobs in the cash flow department.

It is not clear if the market as a whole will crash heavily ala 29, or go into a rebound mode and make up for some of its losses to come out around 10,000 or so. For this reason straddling the stock market with retirement assets seems like a rational course of action in the hopes of getting better future price points and of partially avoiding the possible heavy crashes which may come if any of these economic plans on taxpayers coin do not pan out. Of course, this will miss out on the possible leveling gains. My suspicion is that first quarter numbers, combined with rising defaults on commercial properties, combined with Congress taking a lot of heat for bailing out banks will lead to a further round of bank failures and further economic downturn.

However extreme uncertainty dictates a "halfway" approach.

Our cash position as a portion of assets is at a record level (within records) compared to any time except mid 2005 when we were saving aggressively to buy a car with cash.
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (3) | Ignore Thread Prev | Next

Announcements

Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Post of the Day:
Value Hounds

Considerable Headwinds for Profire Energy?
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement