On what to do when economy is going down...

It's a popular water cooler subject to talk about the down-and-out economy right now. Job market is terrible. Millions of jobs lost, and unemployment rising close to 10% in US. And everyone's job looks to be in jeopardy.

I preferred to stay positive.

So, I started my masters degree (since I have wanted to do that for a while but never summoned enough determination to squeeze my already busy schedule to do it). Afterall, the company is paying for it. While I don't really need the masters to boost my resume (as I want to pursue my own business in my next career move, and don't want to look for another job anymore), it should come in handy in boosting my bio when I have my business.

And I trade with in own IRA account. There are advantages in doing so with the IRA account, for the obvious reasons of tax purpose. And with the IRA, I have a longer horizon. Previously, when I was trading with my taxable brokerage account, I'm happy with profits just to cover the grocery for the month (although I mostly did better than that). Now, with more capital, I have more freedom to pick stocks. All things considered, making close to 8% so far (year-to-date, since Jan 2009) is pretty satisfactory to me. When the market goes crazy, I'm just as happy sitting on my hands (aka cash) instead. With a longer horizon, I'm in no hurry to jump back in the suckers rally.

I have come to realize that I don't want to pay a cut to those less-than-mediocre fund managers, with no transparency at all in the fund prices and activities. And the fund prices are determined in a large part by the irrational behavior of other fundholders (who can exit in droves, forcing the fund prices down due to fire-sale of the underlying stocks in the fund to meet redemption needs). And then, there is the very real possibility of the funds front-running the fundholders. So, no, I don't like mutual funds at all. In fact, all my holdings now are either ETF index funds, or directly holding the stocks.

The important thing is, I don't get greedy. And I don't look back and regret (like, I wish I didn't sell since price is 20% higher now). I make my target, I buy-and-sell, and I get out. I have a profit goal in mind, and I'm happy as soon as it's met.

And I've learnt not to look at the market too often. Emotions do get in the way. There were a few times when I got anxious in the beginning, ditching my initial goal to chase the market (either when it's going up or heading down). I would look at the charts three times a day, no more, no less. Sometimes I think even three times are a bit too much. Well, when I'm busy at work, I won't even look at it at all. I set the goal at the beginning of the day, and that would be it.

I was telling my siblings about this, and they mistook me as day-traders. I told them, I'm not a day-trader. I don't close out my books at the day. I don't bound myself to it. I only buy those that I would be very willing to keep long term, but am just as happy to take short term profit since the market is so volatile right now. Of course, I have a couple of dogs in my portfolio right now. But I know they'll come back at a later point. So, I'll just let them sit, and trade with the rest.

Just as importantly, there are the kids and family to keep busy, and the day job that sometimes runs into weekend when I have to work too. Too bad that nothing much is happening in our other business venture in watches. But in this economy, nothing much is happening in just about anywhere else. At least we don't have debts, and we can hunker down till the storm passes.

I know we'll be ok. I know the country will be ok. My life has been blessed, and I'm grateful to God for the tidings. I wish I could pass on my blessings to those less fortunate.