I have a cousin, Donna, whom I've never met. Donna is the daughter of my mother's formerly long lost sibling. Some years ago I found this sibling of my mother's and helped get the two of them together for the first time in over 50 years. Mom and her sibling have grown close over the years and as time, money, and health allow, visit one another.
As I said, I've never met Donna but my mother has met her, her husband Will, and their children. Apparently they're very nice people and due to diligence, hard work, and perhaps some luck (or maybe just great decisions), Donna and her husband did well for themselves. Very well - like to the tune of more than 50 million well. They lived a really nice, luxurious life, I think.
I found out today they've lost their homes, business, and just about everything else and Will is trying to find a job. When I asked my mother what happened, all she said was that he had a lot of money tied up in the stock market and "Apparently they made some bad investments."
Bad investments? Wow! What a shock this is to me. It doesn't affect my day to day life but it does affect my mother's sibling's day to day life and for that I'm profoundly sorry. I can't imagine the changes they're all going through and how hard this has to be for their family and I hope for only the best for them.
However, it really makes me not want to run right out there and invest. In fact, it makes me want to run screaming, "Fire! Fire!" in the opposite direction!
How do you deal with the kind of fear and uncertainty of something like this? I don't have a lot to invest but we're too old to lose our butts in the stock market or in any other investment.
Is there a way to invest with some certainty or security, even a little bit, or is that simply impossible in this world? Cash might be king but a house full of it won't help if the proverbial **** hits the fan, you know?
What's a girl to do?
Today's spending - too much! I bought lunch and drinks at work and spent $8.62. Bad Denise, bad! I only work five hours tomorrow but I'm taking food and drink with me.
Shocking news, truly
January 2nd, 2010 at 11:22 pm
January 2nd, 2010 at 11:29 pm 1262474946
50 million to zero... There is probably more to the story than your realize.. If the stock market is solely to blame, then they must have only invested in a handful of very risky stocks and not diversified at all. Even then it would be hard to see how 50 million could just disappear without them at least moving a couple of million into bonds etc.
They or their business must have taken on a lot of debt at some point or their cash flow must have been attacked somehow. Warren Buffett said he never knew anyone to go broke who had no debt.
I guess it really doesn't matter how it happened. I just hope they can make the transition to a different life successfully and find some happiness in their new situation.
January 3rd, 2010 at 12:04 am 1262477097
January 3rd, 2010 at 12:15 am 1262477749
January 3rd, 2010 at 01:03 am 1262480599
January 3rd, 2010 at 01:13 am 1262481238
Yes,, it's possible to create a diversified portfolio that can act as a hedge against market fluctuations. I don't know how they were invested, but I'm pretty sure it wasn't in mutual funds, which did pretty well this year, at least with my balanced portfolio of 50% domestic stocks, 15% international stocks, 25% bonds and 10% cash.
If you can stomach the high fees of an annuity, you can convert a wad of cash into a guaranteed stream of income you can't outlive. Or, if you're really market averse, you can purchase CDs.
January 3rd, 2010 at 02:25 am 1262485550
January 4th, 2010 at 03:54 am 1262577277