Kelly In Catty

This blog is Kell's attempt to keep in touch with friends far away who complain that I don't e-mail nearly enough.

Monday, September 22, 2008

Is My Four-Oh-One Okay?

I was at a jam with Dave yesterday... one of Dave's favorites. It's called the Lyons Fiddle Festival - and this year, a ton of people showed up to watch an old-fashioned fiddle competition. It seems even more people show up to huddle off under the trees and jam... That's where we were- Dave, my brother and sister-in-law, and a handful of Dave's old friends - friends he's played in bands with since before I was born (let this be a lesson to you ladies! If you don't really want to see photos of your husband wearing short-shorts, crazy huge photo-gray sunglasses and seventies-era terrycloth headbands, marry someone your own age!) Anyway - it's a good time for Dave - and it's fun for me.

One of Dave's friends is a man named Ted. He's a large person - with a curly head of hair and a bushy bushy beard. He has a beautiful singing voice - a loud one. Add that to Dave's fab banjo playing, my Brother-in-law's funky bass playing, my sister-in-law's uke strumming, and my big old loud voice, then it's not hard to understand that we sometimes draw quite a crowd.

Between songs, one of the musicians said something about his 401K - one of the onlookers said "Oh yeah. I remember my 401K - it's now my 101K!

We all laughed - but it got me thinking - is my retirement in trouble?

In other quasi-musical news, the other day, someone e-mailed me an article from the Wall Street Journal weekend. The writer was a woman named Shelley Banjo. I immediately e-mailed her because I wondered how she got the last name (it's mediterranean) - Anyway, this is how I became only marginally familiar with her. The other day, she emailed me (in a group mail blast) to ask for story leads for an article she was working on. She asked, "If you know anyone who's run to the bank, whose marriage is breaking up - or if you're in the finance world, and you know of clients who are panicking, please let me know.

I answered her that I wasn't that worried - because my portfolio (I think this is the first time I've described my 'vast savings and estate' - hardy har har - as a portfolio) is pretty spread out over several different places, blah blah blah. And I was going to do as my financial guy suggested - Just ride it out.

In fact, I got the following e-mail from a financial planner, who refuses to freak out over volitile markets. I'm pasting a portion of the email below - sorry - I know it's a little long:

In our view, recent proposals by the U.S. Treasury aimed at
recapitalizing the banking system and shoring up mortgage markets for
borrowers could improve effective asset quality, allowing for a more
orderly de-leveraging than if there had been no announcement. However,
asset sales and de-leveraging will still take place, which will create
continued uncertainty and heightened volatility. Recent reports out of
Washington, D.C. indicate that Congress will act quickly to enact a
version of the "Troubled Asset Relief Program."

We believe persistent problems in the housing and credit markets and
their impact on global economic growth will continue to cause volatility
in the equity markets over the near term. We note that many of the
issues plaguing risky assets at present may take some time to work their
way through the system, though recent government intervention appears
likely to help provide some stability, in our view.
Near-term, our
analysis suggests that bottoms-up analyst EPS forecasts may still be too
high for the balance of 2008 and for 2009. Expectations have been
ratcheted down for 2008 but are still above Citi's forecast of an 8.2%
decline. The divergence is even greater next year, where analysts in
aggregate expect a 24% increase in S&P 500 profits versus Citi's
estimate of 5.8%. Given mixed sentiment indicators, this could limit
near-term upside.

They then state: In our view, the process of moderating expectations
will be healthy but potentially disruptive for the market and could
exacerbate an already-volatile equity market environment. Longer term,
however, we believe the equity market is reasonably well positioned to
contend with these concerns;
we point to attractive valuations, solid
corporate balance sheets (excluding financials), and strong free cash
flow generation as drivers for equities going forward. Risks to a
sustained market rally include a continued deterioration in credit
markets, persistently high oil prices, and meaningfully slower global
economic growth. Given our longer-term positive view, we would use
periods of market weakness to upgrade portfolios and build positions in
high-quality companies that generate strong free cash flow and possess
above-average prospects for growth.

Is this the good news - or the bad news? Did I tell Shelly Banjo the wrong thing? Am I in financial trouble?

I'm sure these are all things we're thinking about - so I thought I'd open up the dialogue - Does everyone feel safe - or is there a freak out that I'm too ignorant of? I know people are losing a lot right now - So I'm wondering how everyone's doing out there.


  • At 7:09 AM, Anonymous Anonymous said…

    My husband is the one who has the 401k and manages our assets, but he has talked at great length about how crazy this economic downturn is. I felt like I needed to do a journal entry or something yesterday, the "day that wall street died" (because it's all bought out by govt.) The things I find most alarming is the trend toward hyperinflation: the govt printing 700 b. out of thin air is going to make it worse. The govt. ought to let banks fail, to trim it's own belt and encourage us to live within our means instead of beyond our means.

    We're buying gold, silver, and commodities. Personally, I have noticed inflation in the grocery store: within a year, a three pound bag of apples has gone from $3.99 to $6.99-- in season. It's just crazy.... when the cost of milk and gas are the same.

    I do think the advice you recieved is fine-- everything has to go up and down. But I think the govt. intervention is going to make a Great Depression last longer and be worse than if the govt got out of the way. I'm not at all excited to see everything being nationalized into a socialist govt. Most of us have no choice but to ride it out.

    Here's one site we use to keep on top of things financially:

    --chris f.

  • At 12:35 PM, Anonymous Anonymous said…

    Another link, for anyone who wants to know more about the why behind the bailout:

    Choose the stories under the heading, "What to Do"

    --chris f

  • At 3:24 PM, Blogger Kell said…

    Did the Government just print up extra money? I thought they borrowed it from China - which may have similar ramifications.



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