God damn, I love autumn in Boston.
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The recent closure of our noble little experiment in free markets – if you could call it that – tucked into my finances in odd ways. My 401(k)’s largely intact: an index fund seasoned with a few bonds for stability. But the “smart” portfolio I bought into in August? Foreign index funds, energy funds and TIPS? I took a 25% cut there. I could have spent that money on two XBox 360s and got more out of it.
Knowing economics does not make you any smarter at finance, any more than knowing physics qualifies you to build a bridge. The disciplines share some cousins but don’t speak with each other at Thanksgiving. Case in point: the U.S. government’s plan to nationalize nine of the largest banks in the country caused the stock market to rebound on Monday and Tuesday of this week. Giving the government more power over credit cannot encourage growth; knowing this, I would have expected markets to tank. I should have been thinking as a day-trader, though, realizing that bad money still counts as money.
I also did not realize the extent of the credit crisis, figuring that it would stop at our borders. Overseas investors would stop holding dollars to back their currencies. I did not realize that the rest of the world had bought so heavily into American supremacy that this was a largely empty threat. A sinking tide threatens all boats, etc. So my genius plan of going big overseas did not help.
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I’ve started editing the novel. If you see me hunched over a plastic binder, scratching at a thick manuscript with red pen, that’s what I’m doing. Feel free to ask me how it’s going, but don’t ask to see (yet). I’m weird like that.