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At What Point Do Investors Go Numb?

The DOW has had a lovely run this week so far, but it’s been a roller coaster ride since the year 2000.

You had the dot com bubble burst in 2000, you had the terrible events of 9/11, you had the subprime mortgage crisis in 2007-2008, and we’re still limping from that. On top of this we’ve got:

  • Our own financial mess due to overspending.
  • The European sovereign debt crisis
    • Greece
    • Portugal
    • France
    • Ireland
    • Italy
    • UK
    • Iceland
    • and Switzerland

On top of those headlines, we had the federal budget debacle earlier this year and Ben Bernanke continuing to back-paddle by not doing Just one quantitative easing program,but two quantitative easing programs, with number 3 being discussed.

If that isn’t bad enough, our President is running around talking about new spending programs, and Treasury Secretary Timothy Geithner chiding eurozone policy makers on their debt crisis when we are arguably in a worse position.

Upcoming Elections

On top of these terrible problems facing us, the President is undoubtedly going to need to place focus on his upcoming campaign for re-election, which appears to be a very big battle for him, and no clear cut competition. You’ve got people from every side of the political spectrum, and the voters are still unsure of how far to the left or right they want to be. It looks like standing near the center is about to become very faux pas!

Naturally, with voters so unsure, none of the political contenders have any clue which platform to stand on for fear that voters will settle down on the other side of the conservative liberal spectrum. So, what we have is a bunch of unsure voters who are basing their philosophies on the next DOW swing, and what the news media tells them, and a bunch of politicians watching them so they know who the popular scapegoat is going to be to pin it on.

Social Reform and the Stock Market

Like it or hate it, the results of these elections will define what happens to the economy in the years to come. Will we correct our current course of overspending? Will we implement hostile reforms that will inhibit business growth? Will we pass new spending because we have the deluded idea that the government spending printed money will fix things?

At What Point?

My questions is, at what point do investors go completely numb? No single person could ever take in this quantity of variables, and be able to make a cohesive investment strategy out of it. No matter which way you slice it, investing over the next few years seems like it will be a gamble at best.

I hate to say it, but it looks like the state of our 401Ks will depend heavily on the President, our Congress, and the voters of this country. I’m sure that long-term, everything will probably be fine and returns will be positive, but I have no clue what kind of timeline we’re looking at here. I don’t think anyone does because there are too many factors at play here. Even if we have a President who does everything perfectly, our success will still be contingent on Europe figuring their situation out as well.

What About You?

Don’t mistake it, I’m a ridiculously optimistic person, and despite all the bad news, I’m still in high spirits, but that is because I don’t tangle my entire being in my net worth. I do believe we’ll come out of this OK, I was just curious how others are handling it. What about you? Are you numb to all of the bad news and just riding this out? Are you actively engaged in the markets? Are you liquidating and sitting on the sidelines? What is your story?

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