It has come to my attention that people are going crazy. Seriously, they are! The financial situation this country (and the world) is in can be a bit scary, but it's nothing to lose our head over!
Last week I heard of clients who liquidated their assets and were hiding piles of cash throughout their home. Why would they do that, you may ask. It's clear that they are scared silly. They aren't thinking everything through and made a decision that cost them lots of money, not to mention the added stress that worrying can do to you.
My message is clear: Don't panic. We've been here before and we're going to recover from this. Don't believe me? Again, I am going to reference news headlines:
Figure 1 is a caricature of Pres. Ford tackling same issues we are dealing with today and as reported in TIME's cover story on December 9, 1974, "Not for many years has a Christmas season begun with so many tidings of spreading discomfort and lack of joy about the U.S. economy. Already racked by a devastating double-digit inflation, the nation is now also plunging deeper into a recession that seems to be the longest and could be the most severe since World War II."
In the late 70's and beginning in the 1980's, optimism recovered and Time magazine put out the issue showing housing improving with the economy and the Figure 4 portrayed an economy beset on all sides.
The TIME cover story on March 8, 1982, "Paying More for Money" reported: "Expensive and scarce money has begun driving home builders, auto dealers and businessmen from every walk of life out of business, and in such numbers that bankruptcies around the country are beginning to rival those of the Great Depression." And in 84, America's banks were 'Awash in Troubles', detailing the fallout from the deregulation of banks and the increasingly competitive landscape.
In 1987, the Time magainze cover story was almost hysterical, "The U.S....could not go on forever spending more than it would tax itself to pay for, buying more overseas than it could earn from foreign sales, and borrowing more abroad than it could easily repay. There had to be a day of reckoning, and it could unhinge the whole world economy. On all the world's stock exchanges, prices had leaped up too far, too fast, to be sustained." And global 'High Anxiety' resumed in 1990 in response to the political and economic environment. The U.S. was on the brink of recession and war.
Throughout history we've seen these ups and downs in the financial market. The funny thing is, every time we go through a shift, it's as if we forgot about them. Real estate and the stock market are cyclical. History does repeat itself. There are always going to be ups and downs, we just need to be brave in the face of all this uncertainty. We need to NOT liquidate all our assets and hoard them in our houses somewhere. "Consumers are concerned right now. But again, if you look at history, you see that consumer concern was high at several points over the last forty years. Every time the media reports on 'alarming figures', people gobble it up and react with paralyzing fear. It happened in the seventies. It happened in the eighties. It even happened one time in the nineties. And now we're in the middle of a media frenzy of negative reporting that carelessly avoids any good news." (http://thelonesgroup.wordpress.com/2008/09/04/what-can-history-teach-us-about-real-estate-by-denise-lones/)
One of my heroes, Dave Ramsey recent commented, "You don't get hurt on a roller coaster as long as you don't jump off." Isn't that the truth!?! Joni Clark, Chief Investment Strategist said,"If you'd had the courage and conviction back in the early 70s to ignore Watergate, the oil crisis, Vietnam and inflation and invested $100,000 in the S&P 500...and then if you'd taken a long-term perspective and not worried too much about the S&L crisis, the 1987 "panic," the tech bubble and all the other speed bumps along the way, you'd now have more than $3,800,000. So, remain invested. There are no guarantees, but throughout our history investors have been rewarded for long-term investing in stocks, for staying the course through short-term noise, and for being prudently diversified. Looking back at all that happened over the last 35 years, we have some breaking news for you: it's not different this time." (http://areanews.losgatos-saratogahomes.com/?p=26)
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