Mar 09 2009
When Good Investors Lose Everything
Take the unaverage investors. These are the people who research the stocks that they buy thoroughly, don’t buy on a whim, study the winds of finance. These investors sock away money because they feel bad times are coming, or just because it is the right thing to do, or because they are naturally prudent. These investors stock their pantry enough for six months. In short, it looks as though they do everything right.
And then, for some inexplicable reason, everything in their life goes awry. A job loss stops the money coming in, then the unemployment goes on and on. No job, no way to leave a home behind, no way to sell it. These are people who seemed to have played by the rules, didn’t buy extravagant toys.
The difficult part is that this is happening today to many more investors than what most people realize. The media, which has rightly pointed out people who have bought “toys” by using their homes as credit cards, has neglected people like the ones who read this blog. These readers are conscientious about money, takes care to be selective, maybe splurges only a little, but tries to deal with money thoughtfully. The media has ignored these responsible people, so the misconception that is out there is that everyone suffering is irresponsible.
Take Theo, for example. Like many people associated with money, he tried to prepare for the times when money would be a problem. But health issues delayed work for him for six months in 2006 and 2007. Then he didn’t find full time work for six months. Finally, when he got a full time job, he got laid off in December. Now his pantry looks more bare, the savings is drained, and his investment property isn’t selling.
This is a man who doesn’t have a snowmobile, boat, four-wheeler. He drives used cars, shops sales for food, and the used stores forever. He can’t remember when he has bought new clothes for himself or his children. His wife, works part-time when the children are in school. They had a sizable savings that was drained from his period of unemployment. Now they race to pay the bills.
This issue was brought home to this blogger when a recent writer made a comment about priorities when losing a job . Here is an investor who knows more about money than the guy on the corner that buys on a rumor with no research at all. He understands bonds and stocks. He takes care to learn. And he has been struggling. These are the folks that defy the overspending, irresponsible “investor” that bought when someone gave them a new idea.
Severe recessions and depressions defy the most frugal acts of responsible people. Additional blows by a health issue, a suddenly dependent parent, or an accident such as a fire to a home, take these good people into a spiral downward that defy belief. It’s unfair, but requires the rest of us to reserve judgment of a person’s economic state. The truth is, no one knows what causes a person to become destitute. Perhaps that is something worth mentioning in a world that is highlighting the pain of the foolish.
A time like this can make a hard working person who was once on top of the world, feel like they have worked and saved for years all for nothing.
Yes, that’s true. And the most difficult thing about it is watching people like Bernie Madoff take away life savings and just go to jail. You would think there could be worse after leaving people penniless.