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Investments: They were nice while they lasted

21 Nov

Our investment totals the past few months have been dropping fast, kind of like GM stock. We’ve lost roughly three times what we paid for our first house back in 1971. And I don’t think the bleeding of dollars from our retirement fund has ended. I don’t look forward to getting each month’s new statement.

I’ve been reading and listening a lot lately to the words of the so-called economic experts. And I’ve been watching for signs that indicate a change — good or bad — in the condition of our economy. I have made some observations I’d like to share:

* When it comes to your investments, don’t panic. Right now that’s easier said than done, of course. I keep thinking of the words of people I trust: “If you’re in it for the long haul, you’ll be OK. Don’t panic and do something rash that you might regret later.”

Health permitting, I probably have another seven or eight years to go before retirement. Our investments will have some time to climb out of the hole they’re now in. It’s the folks who are now retired or about to retire that I feel most sorry for right now.

* It appears some lenders and some borrowers made some mighty poor decisions in the past. I’m not all that smart when it comes to dollars and cents. But I’m smart enough to know that if a lender talks people with a poor credit history, or people who simply can’t afford to buy a house, into buying one there just might be a problem down the line.

In addition, when I’ve heard of folks borrowing money for houses on adjustable rate mortgages, with future balloon payments or based on the incomes of both a working husband and wife, warning flags waved for me, if not for them.

* I’m not sure that throwing money at Wall Street — Uncle Sam bailout style — was the answer. But Congress and President Bush did it despite many objections from voters. It’s over and done.

The trouble is, everyone with the inability to manage their money — from nearly bankrupt states to U.S. automakers — are now lining up with their hands out.

More bailouts? Why? I’m not seeing a whole lot of evidence that the Wall Street bailout has done much good.

U.S. News and World Report columnist James Pethokoukis suggests we all order T-shirts that say, “I just paid a trillion bucks to bail out Wall Street — and all I got was this lousy economy.”

Sadly, he says that funny because it’s true.

* People are scared. Lots of people are afraid of losing their jobs and their houses these days (many already have lost one or both) so, generally speaking, they’re spending less money and they’re borrowing less money. The marketplace is having to adjust to this.

The first two full weekends each October, Sherry and I take in the fall festivals in Knox and Fulton counties in Illinois and Van Buren County in Iowa. It’s a get-away tradition we look forward to.

Vendors in the various villages we visit sell everything from arts and crafts to furniture to homemade apple butter to flea market items.

When we visited the first weekend in October, it was obvious there were fewer vendors and customers in both Knox and Fulton counties.

Only about half of the usual number of vendors had set up shop this year in courthouse square in Knoxville, Ill. Curious, I later chatted with a vendor from the St. Louis area in Lewistown, Ill. This was when fuel was approaching $4 a gallon.

She told me their sales and traffic were down this year, and she wasn’t sure if she and her husband would return for the 2009 edition of the Spoon River Valley Scenic Drive.

“It cost us $400 before we even sold one item,” she said.

That included the vendor fee at the Lewistown Fairgrounds, hotel rooms for the two Saturday nights they were away from home and the fuel required to pull their heavy trailer of merchandise from their home to Lewistown and back two weekends in a row.

London Mills, Ill., was another tipoff that it wasn’t business as usual this year. We usually have to wait in a long line of cars to get into that community, one of the more popular stops on the scenic drive. But this year there was no waiting — we drove right in to town and parked.

The second weekend in October, I spoke at length with a vendor in Keosauqua, Iowa, on a Saturday night after he had completed the first of two days of business during the Villages of Van Buren Scenic Drive Festival.

He said the number of people who had walked past his stand, where he sells craft items made by his mother-in-law, had been close to normal. But he said customers were spending considerably less money per purchase than they had in years past.

* Wal-Mart isn’t hurting. While people may be spending less money these days, they are parting with a good portion of it at Wal-Mart. The company reported its net sales for the quarter ended Oct. 31 were $97.6 billion, an increase of 7.5 percent from the $90.8 billion in the third quarter last year. Wal-Mart income for the third quarter was up 6.6 percent from a year ago.

Lee Scott, Wal-Mart president and chief executive officer, said in a news release that the company is optimistic about the upcoming holidays.

“At a time when our customer is feeling the pressure of a tough economy, Wal-Mart’s price leadership is more important than ever,” he said.

Let’s hope consumers also remember their neighbor, the local retailer, when they make their purchases.

* Layaways are back. After a 20-year absence, Sears is again offering layaway on a wide selection of merchandise “to make gift giving even easier and more accessible for families on a budget.”

For younger readers, a layaway allows customers to reserve merchandise, pay for it in installments and pick up the items when they’re paid for.

* Even before the economy went south, Sherry and I had decided to pretty much switch from the use of credit cards to debit cards.

Credit cards, while convenient, result in monthly invoices, which, if paid in full and on time, don’t result in a credit charge. But the danger with credit cards is, people have a tendency to use them too often and spend too much. Then it’s difficult to pay all the bills when they come in to avoid the hefty finance charge.

Debit cards, on the other hand, immediately deduct money from a bank account to pay for a purchase. Using them is sort of like writing a check.

The downside for us in making the switch from credit cards to debit cards has been going through touchpad hell trying to cancel our credit cards by phone.

It’s difficult to get to speak to a live person. You’ve heard the recording: “All of our operators are busy with other customers. But your call is important to us. It will be answered in the order in which it was received.”

The message should be, “All of our operators are busy with other customers. Your call is important to us but not important enough for us to have hired enough people to answer it.”

Furthermore, the push-button options in the recorded message at credit card companies usually don’t include one for canceling an account. What a surprise.

Copyright Nov. 20, 2008. This “Everyday People” column appeared in The North Scott Press, Eldridge, Iowa.

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1 Comment

Posted by on November 21, 2008 in Uncategorized

 

One response to “Investments: They were nice while they lasted

  1. Dan-O

    December 15, 2008 at 4:09 pm

    As one who is trying very hard to retire right now, I have bumped my retirement date back a few times. At the moment, it is in limbo. No bailout should be a handout. It should come with restructuring, and GAO oversight by what Garrison Keillor refers to as “gimlet-eyed accountants”. There needs to be a trip to the woodshed for these companies, and no glory or further remuneration for the CEO’s who put them in this shape. They should at least face the same kind of scrutiny that welfare mothers do.

     

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