Emotional Roller Coasters
Being un-hedged in a volatile market is just asking for trouble.
I was recently on vacation, seeking respite from the brutal cold of the Northeast in winter.
My wife and I were having fun by mid day at poolside. She had located inexpensive airfare on a non-stop flight that left the frigid temperatures of a few hours and 1500 miles ago a distant memory.
Suddenly I became aware of a woman engrossed in the headlines of the newspaper proclaiming the death of stocks.
She was probably in her late 50’s, and wore a bathing suit that did little to disguise her obvious love for food. I have noticed that a lack of discipline in one area of our lives is often manifested in other areas as well.
Horrified, she turned to me and said “This is just awful, I don’t know what I am going to do. All of my life savings is invested in the market, and I need it for my retirement.”
I mumbled something profound, like “Talk with your financial advisor, I am sure they can help you.”
She did not prolong the conversation, obviously uncomfortable talking about financial issues.
She had no “Plan B”.
I thought how sad it was for her to have arrived at this point in her life, unaware of sophisticated instruments like “puts” and “calls” and “cash”. “Shorting the market” would actually make her wealthier as volatility increased, and the concept of hedging would avoid leaving all of her assets exposed.
She probably has Home owner’s and Fire Insurance; why not protect her money as well?
Basic financial literacy is a must as we learn how to make adjustments in the ever-changing global market.
Through our free website we hope to expose people to some of the best resources we have found available to teach us how to take control of our financial destiny.
Hopefully you will join us, and share some of the resources you are aware of with our community.
My hedge against the snowy chill of winter is a non-stop flight; what’s yours?
Personal Finance Blog
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