Economy Bandwagon

With the economy apparently starting to recover from the recent failure of the banking industry; I have been looking back at my experiences and trying to figure out how to best achieve some success by learning from others mistakes.

Lesson One

I think the first lesson I will be taking home from this recession is that people who deal with money on a day to day basis really have no idea what they are doing.

I’m not trying to say that no-one has a clue about money, I’m saying that the professionals who are continuously pontificating what will be next and how bad everything is don’t have any better idea than the rest of us.  I have certainly lost personal respect for most of the money managers currently out there.  The signs of market collapse were out there quite some time ago and many non-professionals I know had their money out of the market and protected long before the world “ended”.

Lesson Two

The bandwagon is a powerful force.  I have seen the bandwagon effect everywhere.  Sports teams have to be one of the primary sources of bandwagon jumping.  Just a few weeks ago everyone I knew was cheering for our local sports teams and the moment they lost everyone was somewhere else.

Doing this with your money can be very dangerous.  The stock market performs very well over the long term and many studies have been performed to prove this.  I have personally checked the stats and if you are investing over periods of 10 or more years there has never (actually never) been a case where you did not perform well.  This even includes the 10 year periods with the Great Depression and the Dot Com Bubble.  Crazy I know.

Lesson Three

My third lesson is how very easy to watch everyone else loosing everything, until it happens to you.  I personally discovered how I was relying on an unsteady source of income as a stable source.  Once it dried up I certainly learned in a hurry how foolish I had been.  For now and into the future I will be ensuring that my monthly budget is designed for saving.  This way I will have a better buffer should an income source dry up.  I also intend to not spend unstable income for day to day needs.

I have learned other lessons over the past year, maybe I’ll cover those in a part 2.  What lessons did you learn?

One thought on “Economy Bandwagon”

  1. Great post. I would agree with you as well. I often think that the downturn in economy is partially due to the fact that the leaders/decision makers of the big companies made some bad decisions. However when you look at unemployment, it seems like people on the lower end of the pyramid are the ones getting laid off/losing jobs/getting their hours cut, etc…. I think that the leaders that made the decisions should also share some of that burden and responsibility.

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