Lazy Man and Money

Market Conversations with a Co-Worker

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“Have you Seen the Market Today?”

… That’s how my co-worker started a pretty simple conversion about a week ago. She knew I was a personal finance blogger (I didn’t tell her which one), so it was a completely reasonable question. Yet, I froze like a deer in headlights.

I remember thinking, “I should have seen the market today.” I should have seen it yesterday and the day before. I should have at least seen it in the last week, right? Well, I hadn’t. So I went back a month… Nope, nada, no clue how the market had been doing in that time.

My next thought, “I’m the worst personal finance blogger in the world.” (Readers are frantically nodding their heads right now). “I should just hang up my keyboard and retire.”

Before I go with that drastic action, I figure it’s worth asking myself why I haven’t been following the market. I came up with a two reasons why:

  1. I’ve reached a point with my financial situation where the market doesn’t effect me much. If the market goes up or down 1,000 or 2,000 points today it doesn’t really impact my lifestyle much. I’m fairly comfortable with my contracting gig, and the websites that I have on the side are not directly tied to the market. I don’t know how to express that liberating that can be after being a software engineer in 2001 when jobs were few and I had no other income as a safety net.
  2. I’ve lost faith in the market. When I look at the market today, I see it almost exactly where it was 10 years ago. Sure there have been ups and downs in that time, but for the most part it is a lot of running in place. I know I’m in for the long haul, but it seems more and more that I can’t rely on the stock market to double my money every 7-10 years. Maybe it will happen. Maybe it won’t. As Angel said to Buffy the Vampire Slayer, “I’ll start working on a second front. Make sure I don’t have to use it.”

In the end, my response to my co-worker was, “I hope the market went down. I want it to go real low so I can buy in for a recovery.” Hey, what else would you expect me to say? I’m only 34 and not likely to be using that money for some time.

Alternative Income Streams – March 2009

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Another month is over and it’s time to go back and look at how I did with my alternative income in February. The quick answer is that I made $2767.41 after taxes. That’s a nice gain from previous months. Like each month, some income disappeared and some new reappeared. I’m starting to wonder if it’s easier to start 10 websites and hope I can bring them each to $1000 than take my current ones beyond that.

The big news this month is that I have started contracting full time again. I won’t necessarily be working all the time, but as of now, there seems to be as much work as I want at a good price. It will be interesting to see if my alternative income can stay the same. I’m curious to find out if it will. The downside of the new work is that it will be hard to increase it while working full time. I certainly couldn’t go ahead with the 10 websites that I brought up in the last paragraph.

There’s another side effect to this new-found work… I’m trading time for money. Ugh. I’ve said here for a long time that I want to get out of that game. It’s why I wrote about defining alternative income. One way to look at it is that if it’s enough money it’s okay. Would I trade 8 hours of my time today for $5000? Sure! I could put in some ten days of work and have a solid year of income. Of course I’m not getting paid that outlandish rate, it’s just an example of how trading time for money is not black and white – there’s a lot of gray. Now, I just have to focus on getting this money quickly so that I can plow it into the stock market. Dow 6700 intrigues me. Even if it just goes lower from here, I feel that in 10 years I started buying in at these levels.

Getting Ready to Buy Some Stock

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Wednesday my wife said, “You know we have a lot of cash sitting around, we should start to invest it while everything is cheap.” It’s amazing how I can write about this stuff everyday, while she spends about 4 minutes a year on it, and we both come to the same conclusion. Then Thursday happens and the stock market store just slashed prices another 7%. Friday morning, I hope to open up a Zecco account (why do people pay commissions?) and see how quickly we can get some money in the market. I say “hope”, because I expect them to give me lots of paperwork and/or ask for me to fax something. Faxes don’t work well with my Vonage phone lines.

I make it sound like an easy decision to invest. We have a long-term view and could wait out quite a bit of a downfall. I realize that earnings and cash-flow are likely to drop making stocks, even at this price, fairly valued. Still, I have to agree with Chad at Sentient Money when he says, “This market might be the best buying opportunity in the next 10 years.”.

So what would I buy? I think, I’ll stop by Vanguard and look for some cheap broad-based ETFs. My first target will be to load up on Total Stock Market ETF (symbol: VTI). I’ll add some Small-Cap ETF (symbol: VB), just to overweight ourselves in that area a little bit. I would also look to their REIT ETF (symbol: VNQ) to diversify quite a bit. I may then look to diversify more by looking at PowerShares DB Oil Fund (symbol: DBO) and PowerShares DB Agriculture Fund (DBA). These last two typically go up as oil and food prices go up. This is a great hedge and if oil goes back up to $140 a barrel, we’ll have solid stock gains to offset the pain at the pump.

Would you buy tomorrow? If yes, how would you reduce risk, but still try to capitalize on these relatively cheap prices.

Update: Looks like it might take a few days to get the Zecco account set-up. I did everything to set up an active account yet it doesn’t look like I have an account set up to fund. Once I do have an account set up, I will need to decide how to fund it. If I go with the free ACH method it’s going to take 5 days. If I going with the wire transfer it will cost $20, but be quick. I’m leaning towards the wire transfer at this point.

Jim Cramer: Sell Your Stocks

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While watching the Today Show this morning I was very surprised by Jim Cramer’s words. He said it is time to get out of the stock market (note: huge caveat follows). Economists almost always say to stay the course and not to panic. Plus we know that when the market is down, you can buy more shares and actually do better than when times were good.

To get back to Cramer for a second, he actually said to get out of stocks if you plan to use the money sometime over the next five years. That’s actually fairly standard advice anyway. Then again, I’ve always thumbed my nose at that expecting that diversification can save me. (Here’s yet another good time to reflect on why I’m an idiot… okay, done? Let’s move on.)

Cramer went on to say that he’s been thinking about it all weekend and said that he really didn’t want to tell people to sell their stocks on television. It’s one thing if he says it on CNBC, but he’s saying it in front of a national audience. The way he said it made it sound like one should panic.

What does this mean for my mother who will be retiring in the next five years? It doesn’t really change too much. She should continue to have some funds in conservative investments – things that aren’t stocks. This is what almost all financial planners recommend, so it shouldn’t surprise you. The one thing that’s worth noting is that even at retirement age, she should realize that she’s likely (I hope at least) to live for many more years. Thus she should still continue to own stocks for the money that she’ll need then.

Perhaps Cramer’s “dramatic statement” (Ann Curry’s words), really don’t mean a whole lot.

A Brief Net Worth Update

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For the past couple of years, I’ve been keeping track of my net worth and posting about gains and losses. I’ve started to realize that it’s typically a very boring post. I don’t know if readers really get too much value in reading that I’ve lost $800 due to stock market fluctuations. As such, I think I’ll just continue to weigh in with a brief post like this and give a couple of interesting details… if there are interesting details to give.

This month was a tough month. The stock market hasn’t been doing well and my retirement plans are taking it on the chin losing $8,000 in value. The other interesting piece of note is that I had more cash this month than last month. This is notable because I’m not making what many would consider a good income while I focus on building a few businesses.