Tuesday, July 15, 2008

Why Fran and Fred Make Me Nervous

I'm one of those people that looks at their 401K account on a daily basis. I realize that this is a bad idea and am told that I shouldn't but I can't help myself. I guess you could say that I've created a competition with myself and the game is to see if my portfolio sucks less the following day. I have also suckered in a couple of my associates to play the game. Sometimes it turns into a who-in-the-group-sucks-less match. What fun!

Over the past 12 months, I have literally watched tens of thousands of dollars fly out of my account. I contemplate parking my stash in a guaranteed portfolio but I know better. I guess that's why I shouldn't look at it as often as I do. My portfolio is light in real estate and heavy in energies but it is still taking a pounding. But I'm supposed to be OK with that because I'm buying more at a lower price and it will eventually rebound, right? Of course!

What prompted me to write this was the news I just read regarding Frannie Mae and Freddie Mac. These two companies combined guarantee or own $12 trillion (that's with a T, not a B) in U.S. mortgages. Both companies are facing failure and possible government takeover and control. This is horrible news no matter the outcome. If both are allowed to fail, the housing market as we know it will face total and complete annihilation. The real estate pains we have faced over the past couple of years will seem like a walk in the park. But if the fed steps in and takes control, the dollar will be completely and totally worthless.

Bye bye American market and economy. Bye bye 401K. I'll miss you both! XOXOXO

On a slightly unrelated topic, I wanted to share the following video. I love the facial expressions on everyone's face as Matt Simmons tells it how it is. It happens 4 to 5 minutes into the clip:

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