The Ignorant Investor

This is probably not a promise I'll keep, but I'm going to try to stay off all the political blogs until the election is over. I spent the years running up to the past two cycles arguing politics on the internet, and I'm worn out of the irritation it causes. Before you go on the internet, you assume that if you sat down and had a serious, thoughtful conversation with most people about politics you could reach agreement on any number of issues. After you've spent time on internet political boards, you realize that are millions of people out there with whom you will never, never agree on even policies on which you thought there could be no disagreement. Think there aren't people who still want poll taxes? Wrong. They're out there, and they're dying to make the case on the internet.

These days it's hard to get excited about a race where of the two leading contenders at the moment, one is famous for parlaying her time as first lady into a senate gig and the other is an ex-mayor who is best known for being able to go on national TV after the Word Trade Center fell down without freaking out. There is the scent of the banana republic in this cycle, and that's making me feel kind of grim because I don't want to live in a banana republic.

This is one of those days that illustrates the emotional utility of diversification. On a day that's seeing 2+% drops in the major averages, long term treasuries are rising in value. So even though I may weep bitter tears over the decline in the S&P500, I can take small comfort in the knowledge the U.S. treasuries are cushioning today's fall.

I'm hoping this isn't the shape of things to come. A 20% or 30% drop in the market over the next couple of months may not be surprising, but that wouldn't make it feel like any less of a big kick in the nuts. I know I needn't look at the short term because retirement is another 25 years away, but the scale of a 25% drop when it shows up on the monthly scale is hard to ignore. It's odd, because I'm actually living two different financial lives here. On the one hand, I'm trying to manage a sizable pool of money for retirement, and on the other I'm making a middle class salary.

The retirement money belongs to me, but in practical terms it's not really mine. I'm going to need it when I'm old. I can see it in an account, could take it out if I pay the government a penalty, but in reality it's not mine right now. It belongs to future me. The one who will be old and sick and too worn out to work come 2032. It's his money and I can't use it. When things go well in the market, future me can make a couple of thousand in a day. On a really bad day, he can lose a few thousand dollars. Making a mistake can mean a loss of thousands of dollars in a day.

Meanwhile, current me has to rely on the remaining portion of his very average salary to pay for everything else. Taxes, housing, food, car, healthcare. Current me doesn't think in terms of multiples of a thousand. Current me worries about nickels and dimes. Whether its worth spending a couple of hundred bucks on an X-box 360. He skips going to Starbucks because he doesn't want to spend to much on coffee. Wears clothes forever and drives a car with 150,000 miles on the odometer.

I'm not complaining or anything, it's just something I find a little bit bizarre.