I am a small-as-you-can-get investor of 13 years in the stock market. As small as I am, I would prefer to be smaller. But to survive I’ve put more of my savings at risk in the market than ever before because the so-called “safe-investments” like CDs have dried up. I’m not out to get rich. My goal is to hold on to what I have and hopefully make a thin dime or two. Capital preservation, it’s called.
Today I’m faced with another issue: the government’s debt-ceiling crisis and how much investment to keep in the stock market. All of it? Fifty percent? What? I’m having trouble understanding what’s real.
An editorial in this morning’s New York Times said the nation is on “the brink of ruinous default.” On the other side the stock market, the supposed smart money, yawns. As I write, the Dow has dropped only about 1 percent this week as the countdown reaches six days. I can only believe that the market forces are betting or are pretending to think an agreement will soon be reached in Congress, that there will be no default.
As for me, I have hedged my bets slightly in favor of the stock market’s take on the debt-crisis.
Believing the market can not continue its upward path in the light of high unemployment, I had already put 30 percent of my stock-market money on the sidelines. On Monday I took another 10 percent out, selling two non-performing stocks of late, Berkshire Hathaway and Toll Brothers. That leaves 60 percent, most with my Big Three — Gold, Exxon Mobil and General Electric but also the Swiss pharmaceutical, Novartis. If the market suffers, I will not suffer greatly. On the other hand, if the market goes up quickly, my profits will lag.
A relatively safe place to hide, I know, is in the smaller companies. The S&P 500 has seen heavy trading of late, while the Dow and NASDAQ have been “below average.” But I’m going to stick with what I have for the time being. I did quite well during the 2008 crash, even made a nice sum on the market’s bounce-back.
It’s an awful feeling to be stuck in the middle, knowing not where the economy is going, knowing that corrupt forces and uncaring politicians are dickering with your life savings.