The Blue Roof

Today I am deviating from my planned posts.  I want to share a few thoughts about the current economic turmoil.

I read that over the past 15 months retirement funds in the USA lost $2 billion.  That is about 20% of it’s value.  What is the situation of somebody who has to retire over the next few months?  In the light of this, there is method in my ramblings on this blog.  People who are retiring now is dealt a double whammy:  less capital and lower interest rates.  Read about this loss here.  Not a nice prospect.

In South Africa the Overall Index dropped from over 33 000 in about March to about 20 000 today.  That is 1/3 of its value.  Now this is the scary part, to get back to 33 000 it has to grow by 50%.  How long will that take, just to get back where you were?  BUT inflation is not taking a “rest”.  Inflation still soars ahead.  So when you are back at 33 000, you are still very far behind!

To some people what is currently happening is an absolute crisis.  They will be left destitute or have to work until death do us part.  That is really sad.  To others this is the opportunity to become wealthy beyond their dreams.  Some where on this blog I said:  you make money when you buy.  When is the best time to buy?  At the current fire-sale prices.

I wrote about the long haul in terms of property.  The same applies to shares.  Don’t buy shares, buy a business.  When I bought my Cafe on the corner (yes, I had one of those), I did not buy it with the idea of selling it the next day.  I bought with the idea of building it up. Increase sales, cash flow and profit.  And when I took it to the end of my ability, to sell at a profit.  If Billiton and Anglo were good businesses a year ago, and nothing has changed fundamentally, they must still be good businesses.  Chances of them going belly-up is slim.   The will still pay dividends.  So why sell?  Why not buy more?  The difference between investing and speculation (gambling?) is the time frame and the purpose.

BUT, the bottom line is this:  if you secured your cashflow and financial freedom, then what we are now experiencing is an interesting time.  A time to grow wealthy.

By the way?  How much is a TRILLION?  Hereyou can read how much $700 Billion is.  It makes interesting reading.  That is the USA rescue package!  And who is going to pay for it?  Does not seem fair.  Somebody got stinking rich selling bad debt to the public.  Now the public loses monye hand over fist and they need to be rescued.  So who will pay for the rescue?

Anybody who can tell us how many zeros in a Billion and Trilion?