What Would Lou Do?

by: Roger Nusbaum November 21, 2008    

Roger Nusbaum

Roger's blog: Roger's wealth management firm:
Become a Contributor Submit an Article
  • Font Size:
  • Print

Here is the quote from Lou Rukeyser from the 1987 crash, as per USA Today.

"Let's start with what's really important tonight," he told viewers. "It's just your money, not your life. Everybody who really loved you a week ago still loves you tonight. And now that that's all fully in perspective, let me say. .. Ouch! And: Eek! And: Medic!"

The stock market had another puke down Thursday and clearly fear has escalated if Thursday's comments are any guide. It may not be exhausted yet, but there is a freak out happening.

Now that we have cut in half (down 48% on the year and down 51.9% from the peak) people are afraid and no one knows what to expect next. Lou's quote above is still relevant. I am an optimist by nature. I have had opinions about how this would play out, and while I've generally been wrong about magnitude, the 200 DMA breach was a reliable indicator.

Despite the ups and downs, you are down whatever you are down, and while that may seem to be too much for you, it is what it is. The decline to this point is beyond your control. I tried to write about things that can be controlled, like a trigger point for defense (I started in on that in 2004) to miss a chunk of the bear, but it is clear from the comments that many folks had no such trigger in place. Next time you will.

I'm sorry to be cold here, but if you have a financial plan, that plan will either work or not, based on a combination of luck, minimizing poor decisions and discipline. Not every plan can work because of all the variables in those determining factors (and I'm sure I left some out). If your plan has not worked, then something has to give when the time comes. If you are a little younger and worried about whether your plan will work or not, then something will have to give right now.

I say above I'm an optimist. I am quite certain the S&P 500 will make a new high in the future. The timetable will not be acceptable for some folks, but I am convinced it will happen. So between here, the bottom, and there, what can you do to recover a little quicker? Well, if you have missed some of this bear market you have already helped yourself in this regard. If you buy into what I have been saying, that some countries that are down just as much as the US are down for cyclical reasons and not structural reasons like the US, then you probably know where you need to start researching.

If you have started to learn about new (to you) asset classes, then you are giving yourself a better shot for a little faster recovery than by just sticking with broad based, domestic exposures. You have a chance to shape your financial future by proactively seeking out this sort of stuff. That is why I write so often about things like Norwegian fisheries or hydro funds. Learn about all this stuff, select what makes sense to you and then keep learning. Someone will say there is not enough time in the week for this; ok, something somewhere will have to give.

I realize from a couple of off-the-wall comments that people get the wrong idea about my point of view on things, but I am very much about pull yourself up by your own bootstraps, play the biggest role in determining your own outcome, and quit worrying about how other people are doing.

Related Articles

This article has 10 comments:

  •  
    Nov 21 10:39 PM
    Thanks for the perspective, Roger. It was refreshing.
    Reply | Link to Comment
  •  
    Nov 22 12:28 AM
    I recall Louis Ruckeyser saying that at the time. I always enjoyed him. He was funny and unique and I loved the show.

    No one beat the Street this time around--not even Warren Buffet. Everyone got slapped about real good. Go gold, go silver, and for goodness sake, go platinum.
    Reply | Link to Comment
  •  
    Nov 22 10:16 AM
    This is truly a unique time for US equities. Usually one can find defensive groups that will be the recipients of funds taken out of the cyclical names. Nowadays it seems that while money is in fact leaving cyclicals, it is not finding its way into the traditionally defensive groups. All industries' stocks are weak, and getting weaker. All bullish stock picking should be temporarily suspended until futher notice.
    Reply | Link to Comment
  •  
    Nov 22 10:27 AM
    The wealth of the dollar is in value building. What you have produced. Know what you are selling and you have exchange for trade goods for value and have traded for exchange value for goods. Because earned money is capital money and capital money is to produce and to sell what you have produced. Money value is a capitalist society and not in a government bailout.
    Reply | Link to Comment
  •  
    Nov 22 01:20 PM
    Even St. Warren Buffett has been hammered. Of course, he could lose 99.9% of his money and still have $40 million. So, whatever.
    Reply | Link to Comment
  •  
    Nov 22 02:45 PM
    Due to the over leverage in the system, the markets where like an overinflated balloon, which was popped. This may take a long time to form a new uptrend.
    Reply | Link to Comment
  •  
    Nov 22 03:33 PM
    i miss lou. i dont think he would have b een happy with the scoundrel,scammers,&am... thiefs( he would have known them) that caused this with their phony AAA rated worthless paper & phony mortgages.
    Reply | Link to Comment
  •  
    Nov 22 07:22 PM
    While I too enjoyed Louis Rukeyser on Wall Street Week for many years, I was very disappointed when he removed panelist Gail Dudek in the late 90's early 2000 because she was always bearish. Her insights were spot-on and Lou's were too much Wall Street cheer leading. Wall Street requires humility and adaptability. At the crucial juncture of March - September 2000, Lou blew the change in the market and to my recollection never admitted it. Still, he was the best business commentator of his time.
    Reply | Link to Comment
  •  
    Nov 23 12:42 AM
    Probably need Gail Dudek more than ever now.
    Reply | Link to Comment
  •  
    Nov 23 07:28 AM
    It's always not easy, and that (I guess) is the gist. But down to brass tacks (after applying all the webwork, cushioning and fancy cover to the basic frame), we have the 200DMA "breach", signalling a point to begin moving in or not moving out. (Right?.. or is there something else that counts here?)
    Reply | Link to Comment
Top Rated Comment Streams:

Numbers are net rating-

See all Top 100 »
More by Roger Nusbaum

Investment Resources
Money Management
Research
Seeking Alpha provides these ads as a service to its leading contributors
Articles on related themes
Market Outlook
Style Strategy
Bonds
Dollar/Currencies