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What happens if the unthinkable happens?
Old 03-05-2009, 10:21 PM   #1
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What happens if the unthinkable happens?

My apologies if this topic has been covered before.

I have been hearing some very dire predictions of where the market might find a bottom and I've been wondering about the real-life implications. Say, as some have predicted, the S&P 500 falls to 150; is the impact primarily to the "investment class" (which I believe is now about 60% of Americans), or is the impact more broadly felt? I believe it would have catastrophic results outside of people's investment portfolis, but maybe I am wrong and life just goes on as normal for most people.
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Old 03-05-2009, 10:30 PM   #2
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Just what I needed to read before I go to bed.
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Old 03-05-2009, 10:33 PM   #3
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What happens if the unthinkable happens?

I'm unable to think about it.....

Ok, I've given my smart @ss answer above to try to make someone grin....

Now I'll give my reply. I don't know what will happen. I do think most of us are stronger than we believe. Regardless of how bad it gets; there will always be laughter, joy, hope and love. The same goes for the good times as there will always be crime, poverty, abuse and those in need.

As I have said many times on this forum before; I plan for the worst, hope for the best and am content with what I have.
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Old 03-05-2009, 11:01 PM   #4
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I have a feeling that by the time the S&P falls to 150, the country will have been in the midst of another great depression for a while. Everyone will get hurt, not just investors. Of course investors would lose lots of money, but non-investors would not be shielded from job losses and foreclosures/evictions. From what I read of the great depression, people who fared best, were people who had significant cash savings and owned their homes outright. Those with valuable skills and key government jobs (firemen, policemen, teachers, etc...) also made it OK. Nowadays, people with SS and/or government pensions would probably do quite well. Anyone with a private sector job and limited savings would probably be most vulnerable.
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Old 03-05-2009, 11:01 PM   #5
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To understand the implications of the S&P at 150 we would need to know the what were investors looking at it to get there.
A little more than a year ago I would have thought you were a troll or something.
Now it is in the realm of possibility - the worse case I saw was 350.
Can it get to either of those numbers fast - yes - just let another terrorist attack happen in the USA.

Dam, now you made me put it all together - Biden saying Obama will be tested at the beginning of his term; plus the stock market action = S&P 350 or 150.
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Old 03-05-2009, 11:07 PM   #6
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Who is left for the government to tax when everyone turns up in the poorhouse?
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Old 03-05-2009, 11:10 PM   #7
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During the great depression unemployment climbed "only" to 25%. So 75% of people still had a job and could pay taxes. Of course, the government can always crank up the printing presses to offset tax shortfalls.
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Old 03-05-2009, 11:12 PM   #8
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I thought we were there the other day. I check the market on msn home page.

It said -199 (or whatever)

Then for the point level there was just a dash. No number.

I thought we went to zero

we can only go up from there? are there negative numbers for the Dow?
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Old 03-05-2009, 11:13 PM   #9
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Oh, I cannot wait: stagflation,. Or will it be depressflation?
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Old 03-06-2009, 05:21 AM   #10
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Lest we forget, there are obviously many people on this planet that would love to raise their living standard to that of a depression-level America. Those people are happy and are living their lives to the fullest. Our only problem as a nation is that we have lived the good life for so long that we will definitely be challenged to accept our new condition gracefully. However, we also happen to be a species that is virtually defined by its ability to adapt. And we will adapt.

Bottom line, enjoy the ride. I would suggest that no matter what, we aren't going to starve (although I could be wrong!) and we will always have our families and friends.

Cheers...
Steve
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Old 03-06-2009, 05:28 AM   #11
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Stake out the best underpass spaces you can find. Get a bicycle (the simple "coaster" type, no gears etc.,) and figure out how to get all your belongings, that you will be taking with you, on it (make sure you have room for about 4 sets of tires and tubes, and practice riding it with all the gear on it. When the time comes leave (what used to be home) and "head out" sleep at the underpasses and travel during the day (eating field corn and other vegetables you find along the way). Do this for 5-10 years and all will be fine. Bury your cash in some cemetery (no one disturbs cemeteries) just don't forget which one.
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Old 03-06-2009, 05:41 AM   #12
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This thread reminds me of the Colbert Report episode I saw last night. He turned his set into the "Doomsday Bunker" complete with fog and ominous red lighting, and he would throw up these ridiculous scenarios that he admitted would never happen, and then ask his panel what to do about them when they happened. That dude is funny.

He was making fun of Glenn Beck who did something similar on his show on FOX, but Glenn was actually serious.........
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Old 03-06-2009, 07:06 AM   #13
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Dividends will continue. Just like in the Great Depression. You do own stocks that pay dividends, don't you?
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Old 03-06-2009, 07:22 AM   #14
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What can one say. All this talk of doom and gloom. I had a nice conversation with my parents, I am blessed to have them both, who lived through Great Depression and WW2.
They survived and thrived.
They went on to have productive lives, decent jobs, raising seven kids, home ownership etc, etc.
The Greatest generation built what we have now. We forgot a lot of the lessens that they learned living though the thirties and forties. We are going to have to relearn them.

For me the unthinkable would be losing them, my husband, siblings, you know, the important things like the people I love. My parents said that family, faith and grit got them through tough times and it is a good combination to get us through now.

My parents are not sweating this whole thing and are taking a been there done that attitude. It helps that they have cash and the house and car are paid for. I used to chuckle at my parents who would recount tales of surviving the Great Depression and prepping for the next one. Funny how smart they look now.

My husband and I took a page from their book. It is part of what got us to FIRE. We have increased our cash position, lowered our equity exposure (we had a several banks stocks that we sold late last year) . Car paid for, home while not paid off has a ridiculously low mortgage payment. Even started a victory garden, granted for recreation but heck we will enjoy eating the produce. ( been seeing quite a bit of this in the city BTW)
If you LBYM you kind of have the tools you need to get through this foolishness.

Oh and turn off the darn TV set. The chattering class will have your mind messed up big time. I firmly believe that each of us has more to do with how well we live than Washington and New York.
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Old 03-06-2009, 07:43 AM   #15
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Turn off the TV? I did the next best thing effective sometime today we are going back to "basic cable" ($16 a month) will be "losing" CNBC, FOX and some of the other IMO "Junk" stations. Will still be keeping my HS Cable Internet where I can see the numbers without all of the "BS". BTW I tried Magic Jack but it is IMHO a piece of junk - took it back for a refund yesterday - only took me 48 hours to evaluate that thing. We will be 100% Cell Phone (at $10 a month) from now on (Oh that part will happen next Monday). Cutting expenses this month is fun (now down $50 a month).
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Old 03-06-2009, 08:48 AM   #16
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Quote:
Originally Posted by Ed_The_Gypsy View Post
Dividends will continue. Just like in the Great Depression. You do own stocks that pay dividends, don't you?
I keep hearing on the news about how companies are slashing dividends, lately. Should be interesting to see if this affects my Wellesley dividends, due at the end of this month.

As long as SS doesn't evaporate and inflation doesn't go crazy, I will be able to live in my house and will survive and be SO much happier than I am while working. I would have to LBYM pretty severely if my portfolio vanished somehow, but (unlike Thoreau) I have a lot of room to work on LBYM and my true wants vs needs. Meanwhile my time, and my life, would be my own.
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Old 03-06-2009, 08:56 AM   #17
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Turn off the TV? I did the next best thing effective sometime today we are going back to "basic cable" ($16 a month) will be "losing" CNBC, FOX and some of the other IMO "Junk" stations.
You will need to check for yourself, but you may be surprised at what you are supposed to lose, but don't. I have the bare bones basic cable, at the price you mention, and have had it at two different locations - - an apartment before I bought my house, and my house. At both locations I was able to receive many/all of the extended basic cable stations without being charged for them, because when you have internet too it is easier for them to set up or something. I didn't question it, anyway.

I get CNBC, Fox, the History Channel, and many others quite nicely.
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Old 03-06-2009, 08:58 AM   #18
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Originally Posted by Want2retire View Post
I keep hearing on the news about how companies are slashing dividends, lately. Should be interesting to see if this affects my Wellesley dividends, due at the end of this month.
Since 2/3 of Wellesley's holdings are bonds, I'm hopeful the impact of all the cuts to stock dividends will be small. The yield is still showing at 5.6+% and that is encouraging.
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Old 03-06-2009, 09:04 AM   #19
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Since 2/3 of Wellesley's holdings are bonds, I'm hopeful the impact of all the cuts to stock dividends will be small. The yield is still showing at 5.6+% and that is encouraging.
That would be SO encouraging. If Wellesley dividends hold up, SS doesn't vanish, and inflation stays under 6% or so, I'll be "sittin' pretty" even if the Dow goes to zero.

Runaway inflation after the market descends to almost nothing scares me, but then life has ALWAYS been such a roller coaster ride.
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Old 03-06-2009, 09:16 AM   #20
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[quote=Want2retire;792120]I keep hearing on the news about how companies are slashing dividends, lately. Should be interesting to see if this affects my Wellesley dividends, due at the end of this month./quote]

Wells Fargo just today announced a 85% haircut to their dividends.
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