Phew, how to not only blow my socks off but…
Sunday, 1 February 2009
Perhaps one of the best quotes that is appropriate at this time come from Warren Buffett. When times are good, investors tend not to ask too many questions about how performance may have been achieved…who cares as long as they did it! But when the downturn arrives and boy, has it arrived with the banking crisis feeding the recession, it is a time to sort the men out from the boys or as Buffett says “...only when the tide goes out do you discover who's been swimming naked.”
But when I read Luke Johnson comments, I wondered if the tide would ever come back in.
Here are a few words “It is clear that as a society we must learn something painful and radical – how to live within our means – because the credit just is not there any more. The easy money is all gone, and there will be no more for a long time.
Previous assumptions simply do not apply. Homeowners should forget about houses going up in value – all that is history. They are places to live in. So cut back on your outgoings. Pay rises are off the agenda. Wholesale pay cuts may yet become common. Put some cash aside if you possibly can; you might lose your job. I fear most citizens’ plans for the future must be put on hold. This is not something happening to other people – we are all in trouble.
‘Prepare for a wrenching, unstoppable redistribution of wealth – and I am not talking about domestic taxes’ Business must adjust to the idea that this stagnation could last for many years. The age of free money from mad lenders is finished. The growth game is over. Whole swathes of industry are on life support. The banks are in desperate straits. If their management cannot see that, then they are even more incompetent than they are portrayed.”
You perhaps now take on board my opening "phew" and are your socks still on???
Yet opinions are opinions and we have no way of knowing what the future may hold and there are reasoned judgements wherever you may look. It partly depends if you see the glass half full or not. Human nature is resilient and forever moving forward but the question Luke Johnson is making is how much time may be spent in a stagnant phase. Irrespective of your thoughts, your money still needs a home. Your pensions need management. I think what Luke Johnson does is open up a debate that 6 months ago was never on anyone’s agenda…at least not publicly.
With new information, investors should be able to make more informed decisions.
I hope that investors everywhere will read some of our comments and take tips from many of the questions available on our blog and ask their advisers and fund managers more pertinent questions about their money.
We are now in a different world that existed only a few months ago and we all need to ask more questions.If you have any doubt what to ask, please feel free to talk to us.
Here’s a final point made by Luke Johnson “After all, who wants to face up to the bleak reality that confronts us? The experts say we will not suffer a repeat of the 1930s slump. Indeed, we have to contend with fresh issues. Like the fact that there are 1.5bn recent additions to the capitalist workforce in China and India – hard-working, increasingly well-educated people, all keen to better themselves. Meanwhile, modern logistics and communications mean trade and production can take place almost anywhere if it makes economic sense.
So why should industrious Asians earn a tiny fraction of what citizens in the west earn? Especially when they have so much of the cash and productive resources, while we have deficits, high costs and poor demographics.”
Do you now want more information about what decisions are being made with your money?
posted by Murray Round Wealth Management @ 16:29,
The Authors
Nicholas Round
Nic is the Managing Director of Murray Round Wealth Management Limited, who seeks to ensure the advice provided is truly independent. Based in Shropshire with clients local, national and worldwide, Nic has strived to find the best possible service for his clients needs, by researching and studying the market, trends and philosophies. Nic strongly believes Asset Class Management will bring his clients Financial Freedom, Independence and Happiness.
Kirsty
Kirsty is our communication guru. Managing information requires considerable due diligence and her passion for organisation gives the clarity we all seek. From Shropshire, with a Psychology Degree and much travelling, she is now back in Shrewsbury...and London often, keeping us all at Murray Round focused.
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