Some additions for those of you who may have already read this.
I’ve delayed selling my stocks for a couple of years, out of laziness and focus on other issues. I know how to analyze the fundamentals. I owned Clayton Homes stock back in 1993, long before Warren Buffet or I heard of Lonnie. I am selling all due to what I see as poor current and future fundamentals of my current portfolio.
You will note that during the Depression, Agriculture and other food companies were stable or did well. Entertainment (e.g. the movies) did well. Also it was the burgeoning era of electronics. More and more uses were found for electricity. TV was heavily developed through the depression and was commercially introduced in 1941. Today we have the explosion of the digital age. Who doesn’t have a cell phone, Playstation2, Wii, etc. I believe some of these companies will be well-positioned when we exit THE GREAT DEPRESSION II in 6-10 yrs. I am also planning on buying silver as recommended by Bernd and others.
Sorry, Ryan, I think the DOW will hit 4000 before it is over.
Lin, I’m with you. Yes, people put their hard-earned money into 401K etc. But a great deal of the growth of those funds and stocks was artificial due to excessive lending to the poorly performing underlying businesses that bought others, e.g. the financial, mobile home, energy (Enron), and housing industries.
Folks, re-read the history of the Great Depression. The fundamentals of much of our then new manufacturing were shaky, coupled with excessive lending to people putting stocks on margin to sell to the greater fool for a profit. Someone realized too many stocks were overvalued and began to sell. As usual, the emotional (stock) market over corrected and excessive selling led to the crash. We will see over correcting again.
Good news, the dollar has only lost 48% of its purchasing power (as compared to consumer price index) since 1984 (25 yrs). It lost the same 50% between 1975 and 1985 (10 yrs). So all in all, we’ve had a good run for the second half of my life. However of note, is that despite little NET change in purchasing power from 1920-1945 (25 yrs), you could purchase 31% more with your dollar (if you had one) during the height of the Depression in the middle to late thirties. Cash is always king!
Some are asking what should I do, what should I do? I say, get the money out of the hands of lost and confused investors and put it into your business, pay them a nice interest of 8-12% and make money with what you know best.
My recommendation is: Due to panicking stock marketeers and the planned printing of trillions of dollars, get your hands on as much of that cash as possible. Cash flow, cash flow, cash flow. Cash is always king!
p.s my dollar today could buy $7.65 worth of goodies when I was born.