What should you do with your retirement fund now? - 18-Mar-08 - Generational Dynamics

Generational Dynamics Web Log for 18-Mar-08

What should you do with your retirement fund now?

According to Suze Orman, most people are too scared to do anything.

Appearing on CNBC late Monday afternoon, well-known financial advisor Suze Orman (who, incidentally, sounds exactly the same as her Saturday Night Live parody) answers the question of what "every day investors" are doing and should be doing:

"Here's what everybody is thinking - they don't know what to do, they don't know who to listen to, they don't know who to believe, and why should they?

Suze Orman <font face=Arial size=-2>(Source: CNBC)</font>

Suze Orman (Source: CNBC)

Nobody's been telling them the truth. They hear someone go on television last week and say, ohhh, Bear Stearns is fine, and then all of a sudden they've seen millions of dollars go down the tube.

But what's happening, Dylan, in my estimation, with really the people out there, the every day people, which are MY people that I'm talking to, they are so afraid, they are really taking their head and sticking it in the sand. They're not opening up their statements, they're not looking at what they have, they don't want to pay attention now because they don't know what to do, and things like today only make it worse for the common person on the street. ...

And where do they own [their] stock? Most people own stock in a 401K or a retirement plan. Normal, every day people don't even think really that they open up an account at a brokerage firm and besides their retirement account, they don't know that you buy stock outside a retirement account. Most people think that the only place and the only way that they invest is with their retirement accounts, so in their retirement accounts, are they looking at their 401K statements? No. Are they looking at the IRA statements, Roth IRA statements, SEP IRA ra statements? No. So they're just keeping plodding along or, worse, they've just stopped doing anything."

Orman then went on to recommend that "every day investors" should open their IRA statements and make sure they understand what's in their accounts. And then they should invest ONLY in good, solid stocks.

People who followed her advice at any time since October 2006 would be underwater today, since the Dow Industrials are now at their lowest since October, 2006.

Orman is an investment counselor. If she ever told people to sell all their stocks, then she would lose all her clients, and she would never be invited to speak on television. All of these people have a built-in conflict of interest -- their income depends on lying, if necessary, to say that stocks will continue to go up.

One reason that I've been right about everything for six years is that I have no such conflict of interest. I neither make nor lose money if the markets don't do as I predict, so I have nothing to lose by telling the truth. I have nothing at stake except my own credibility.

The collapse of Bear Stearns is very ominous, and portends bad times ahead. We're in a deflationary spiral that's accelerating, and can't be stopped by the Fed or any politicians. If you've put off selling your stocks, then you've already lost a lot of money, and unless you do so now, you're going to lose a lot more.

I've written several articles suggesting plans. One of the most recent, from last month, is "Readers comment: Gold prices and where you should put your money."

Now is the time to take action, before things get a lot worse. (18-Mar-08) Permanent Link
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Generational Dynamics Web Log for 18-Mar-08 What should you do with your retirement fund now?

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Generational Dynamics Web Log for 18-Mar-08
What should you do with your retirement fund now?