Monday, 23 June 2008

As Stocks Plummet, My Career Flourishes

I have got a job offer! Let's just say I got a full-time job as an economist at a government department. This job makes sense since I studied economics at university. I'm also very happy because, as you may tell from reading this blog, I have a strong intrinsic interest in economics, finance, markets, and investments. I am therefore doing what I really love.

The bad news is that the last time I checked the ASX200 it was 5283. Now that is low! I remember last year it peaked at about 6400. I don't even want to think about how much money I have lost. All I know is that it is in the thousands. Some people are worse off since they are highly leveraged. But otherwise, I have no debts and no worries. Looking at things from an optimistic perspective, I could say that my investments are just undervalued at the moment and that this current depression is a good opportunity to pick up shares when they are cheap. What a pity the stock market starts to tank right when I don't have enough spare money lying around to invest. In a way I'm happy because I do believe that for a long time the world stock markets were booming too much, especially in Australia. This leads people to believe that the stock market can only go up forever and so people leverage and invest. This drives prices up and creates a bubble. The recent volatility hopefully will pop that bubble completely, allowing me to invest in a bubble-free environment where I can buy mutual fund units for a fair price.

Sticking with the optimistic tone, I am not too worried because I only have about $25,000 invested in shares. The rest of my net worth is in my car, in bonds, and in cash. Some people have millions of dollars in the share market. Any slight day-by-day tremor sees their net worth fluctuate by tens of thousands. But they don't seem worried. They understand that higher risk can lead to higher return.

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