Complex Numbers

Market Down

Because I've talked about financial matters, people have asked me stuff about the stock market.

I am not an expert in the stock market.

My father was an excellent investor. I wish I'd listened more to what he had to say about it when he was alive and in possession of his faculties, but isn't that the case for most of us? In any event, I'm not my father, but like many people, I have a retirement account. And as with many people, mine's down about 40% right now.

Now, a lot of people are panicking. I may not know much, but I know this: as much as I joke around here about the end of the world, doom, Armageddon, Ragnarok, etc., I don't really think we're there. We won't even be there if McCain gets elected (though if he should become incapacitated and Palin ascends to the demigoddesshood that accompanies the Presidency, it may be another story). This is just another belch in the digestive tract of the world markets.

Which is not to say there isn't more pain to come. For myself, the pain may be acute, because my business depends on a thriving building industry, and that's just not happening yet, not in my area. But it's still not the end of the world. Well, provided I can still drink.

At some point (I don't know when, and neither does anyone else), the stock market - and the economy - will recover.

What I do know about investing can be summed up in a few general rules. I made ten of them, since that seems to be the traditional number:

1. Don't panic.

2. Minimize your debt (preferably, just mortgage).

3. Stay invested in the stock market, either through mutual funds or a diversified portfolio of individual stocks.

4. Don't invest with money you'll need in the next few years (if all your investments are in a retirement account, and you're not going to retire soon, that fits the bill).

5. Keep a cash position that'll get you through lean times (most people recommend 3-6 months' living expenses) in an insured bank account.

6. When you DO invest, look for stocks that are cheap in relation to their value. If you don't know what that means, get a mutual fund or buy into an index fund.

7. Keep expenses down so you can invest MORE.

8. Pay no attention to stock analysts, and completely ignore Jim Cramer.

9. Don't trade in and out of the market.

10. See Rule #1.

Drinking is optional, but it helps.

If you've made it this far, and you want to know more about this sort of thing, the best place I know to learn about personal finance is http://www.fool.com/

And now to try to drink again...