Some of my reading from last week:
- Sam Stovall: “Since 1950 we have had 48 pullbacks – meaning declines of 5 – 10%. We’ve had 18 corrections – meaning 10- 20%, and 8 bear markets. At the worst on average we end up getting back to normal in about 3 1/2 years. But people just don’t want to wait that long and they let fear overtake their emotions.”
- How much does a beer cost in Zimbabwe?
- “I cannot believe how a family of seven with children ages 10 through 21 are able to pull off living on an annual budget of $35,000.” Read more at 8 Lessons I Learned from the Cheapest Family in the Nation. Hands-down, the best book on this is The Millionaire Next Door.
- The sky is falling! Predictions for 2008 that are alarmist and have no specifics. Note the last paragraphs where he refuses to give specific predictions. Also (I call this a Kooky Alert), notice how Chicken Little people who predict doom and gloom always argue for the gold standard.
- What to do if you receive a large windfall (and what others did). Here’s what I do.
Join 8,000+ other I Will Teach You To Be Rich newsletter subscribers
I send out an about-once-a-month newsletter with links, roundups, and new things that only appear in the newsletter. To join the 8,000+ other subscribers, enter your email address:
I'm the New York Times bestselling author of I Will Teach You To Be Rich. I co-founded PBwiki and graduated from Stanford.
5 comments
Leave a commentI’ve been following the Zimbabwe economic crisis for sometime now and while the numbers alone are always shocking- that picture is an incredible image.
Thanks for the link Ramit! I’m glad you liked my cheap family post. Though this is impossible to pull in California I’m sure you’d agree. I also wrote another article about how much it takes to live in California and the minimum budget here is $77,000 for a family of 4. I find that insane.
Some sensible article about chicken littles.. at most it will be a bear market for a medium term [up to 2 years], there is no way people will stop spending their own & borrowed money overnight – if you are crazy you can believe otherwise!!
Hey Ramit, thanks for the link, forgot about this kind of guy!
From the picture and the recent grad mention, you probably won’t know of this kook. Around the mid-seventies, there was a book How to Prosper During the Coming Ruff Years, detailing the collapse of western capitalist economies, and the implosion of food distribution systems. As I carried containers of wheat seed, and flour into the basement for long term storage, I could only shake my head at my parents and their peers. Not only were we to stockpile food and water, but we were supposed to mortgage the house and buy gold bullion, and invest in firearms to protect it all.
Having been the controller of a gold mine, I have met the gold bugs and been forced to read the somewhat delusional grasp of reality they have. Enough to make you shudder. This guy you quote – a staff reporter for Rolling Stone according to his bio, spins fright scenarios from the left and right, and then lectures about them to Harvard, Yale, MIT and others. It’s a strange world.
Mike
Well, I think that people ARE (albeit slowly) waking up to the fact that they can no longer spend more than they earn:
http://www.nytimes.com/2008/01/14/business/14spend.html
It’s just not sound economic policy. If the Fed continues to cut interest rates (which it looks like they will unfortunately do) then people will continue their foolish borrowing and will also make foolish investments with that money. While I do not think that the sky is falling, I do think that a time of realization is at hand for a lot of people.
The bottom line is this: Americans currently spend more than they earn, and this can not , and will not, continue indefinitely.
That being said- why would anyone buy gold right now? I know it’s supposed to be a hedge against the falling dollar, but what you should do is: Buy low and sell high. Not the opposite- gold is at record highs right now. I’m not jumping on this band wagon!
Comments on this entry are closed.