Tuesday, February 24, 2009

Four Bad Bears

Face it, the economy sucks. Unless you are some masochist, and I'm sure there are plenty out there, the pain that the world is feeling right now is enough to break any good man or woman.

Thre are lots of doomsday charts floating around the net, the one above is one of my favorites. It shows the stark reality of the crisis we are in and even though we have been trained well in reason and can justify any sort of event even though we know in our gut that things aren't as they should be. It must be a natural defense mechanism, but that's for another discussion.

Here's a question for anyone who knows personal finance better than me. If stock market gains typically underperformn the market indices, then do sock market losses generally outperform a falling market, i.e., do people like you and me feel more pain than is on the charts like these? If you had any money invested with Madoff, then the resounding answer is yes. You diversify to pare losses. I can understand that in a rising market. Is that the same in a falling market?

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