Recent posts by Craig Stock
Craig Stock heads Vanguard's Corporate Marketing and Communications department, responsible for delivering investor information and education in Vanguard’s "plain talk" style.
I’m pretty sure that I resolved several years ago to stop making New Year’s resolutions. My track record at sticking to resolutions was abysmal.
Actually, I’ve done pretty well at hitting savings goals over the years, because I don’t rely on willpower. I use automatic savings—through my 401(k) at work and through preset automatic transfers from checking into investment accounts. These mechanisms are artificial willpower—a painless way to stiffen my backbone.
The economic slump we’re crawling out of has done big damage all over the place: to employment, home values, businesses, and, of course, investment portfolios.
Put charities on the casualty list, too. Charitable organizations have been hit in multiple ways. Demand for charities’ services has risen because of the tougher economic times. Charities’ investment portfolios and endowments have been hammered. And charitable giving has fallen because so many individuals have suffered declining incomes and assets. Boston College’s Center on Wealth and Philanthropy estimates that charitable giving by individuals in 2009 was $217.3 billion, down more than $25 billion from 2 years earlier.
In our household, we know how lucky we’ve been. We didn’t lose our jobs, and our investments have mostly recovered from the markets’ downturn. Knowing the pressures on charities—my wife worked in the nonprofit sector for much of her career—we’ve been discussing how to make sure our own contributions of dollars and time do the most good.
Mark Twain lost a couple of fortunes through bad investments, which probably explains the pungency of his comments about investing.
Such as: “There are two times in a man’s life when he should not speculate: when he can’t afford it and when he can.”
I’ve always thought investors should keep in mind another Twain observation: “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”
Just a few years ago, legions of borrowers and investors and lenders knew “for sure” that there was no way U.S. housing prices could fall much, if at all. We know how that turned out. Sometimes, the things we know for sure actually are true, but the conclusions we draw from these facts are what “just ain’t so.”
I can’t sing a lick, but a tune from the Rodgers and Hammerstein musical South Pacific came to mind as I was thinking about the pervasive pessimism in so much economic and market commentary.
As we sat around after a recent family cookout, talk turned to the stock market’s recent gyrations.
The older folks (I am, of course, in that camp) were grumbling about the spring slump in stocks. After listening to his middle-aged relatives talk about the damage to their retirement portfolios and their varied views on the market, my 20-something nephew, Rob, confidently said he saw no reason to fret.
“I just keep the zoom theory in mind,” he said.