Tuesday, March 3, 2009

PostHeaderIcon Grumblings and Silver Linings

I don't want to sound callous about the economic downturn and pain that it is definitely causing a great number of people, but some thoughts do come to mind as the cable noise machines start trotting out "personal interest" stories about folks in dire straights.

Noone wants to be the one to ask the pertinent questions -- except maybe Suze Orman -- about how they got to where they are.

Clearly, some people -- many, in fact -- have lived on credit for too long... and far outside what their REAL income should have allowed. It's a consumerism-driven trend that's been building for decades. (The same thing happened from 1899-1929, with similar results.)

But enough of the grumbling. Here's the silver lining (at least for me):

I estimate that my 401K will be worth 20% more in 15 years as I get ready to retire than if this downturn hadn't happened.


Because my contributions are going mostly to stock purchases -- stocks, like Chevron, that were trading at $90/share last year and are now hovering around $57/share.

Yes, I take a value hit on the portfolio right now (if I were to liquidate) -- but I am able to buy more shares (dollar for dollar) through my payroll contribution and company match. This gives me a premium that will really pay off as stock prices return to their historical P/E trends.

So -- I'm concerned, but not overly concerned. Cautious, but not fear-struck. That's a silver lining, as well.


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