Disappearing jobs and vanishing retirement funds have gotten the attention of almost everyone (some on Wall Street were acting like it was business as usual).
As the county moved into 2009, there was a growing sense that we had better put our “shop ‘til you drop” attitude behind us.
The future, at least for the short term, looks like getting by with less and getting back to basics.
That’s sound advice.
Back to basics will mean different things to different people. Some will focus on reducing or eliminating debt, especially high-interest credit card balances, auto loans and home equity debt.
For stock investors, it will be a good time to refocus on why you are buying a particular stock or security.
One of the first rules of investing is: know what you are buying. You should know how a company makes money and what its market is.
Investors that get burned when companies fess up that their assets are, in fact, liabilities have no one to blame but themselves.
Investors that let management corrupt the capitalist system by not fully reporting risks or hiding the true value of exotic securities shouldn’t cry when the balloon bursts.
If you don’t understand what a company does, how it makes money and what its market is, don’t buy the company’s stock or its bonds.
Look at the amount of debt the company is carrying and how much cash is on hand. How well did the company do in a good economy and how is it doing in a bad one.
This is where you begin. Forget easy money and fast deals. There are many great companies that will thrive when the economy returns.
Be prepared.
