Moon Kil Woong

Lessons the Market Taught Us in 2008

Nice article. Although people talk about how poorly many companies mismanaged their finances they were not alone. The difference is that they are paid and profess to know how to mitigate or avoid risk, we are left to forage for ourselves in the ruins they often construct. I wish everyone the best of luck this year.

Like real estate agents use to profess. There are three words for investing in down markets: safety, safety, safety. However, like real estate agents, don't get lured by the bearish siren song too much and wade headfirst into long term treasuries. Nothing lasts forever. After safety will likely come a great destruction of wealth the other way around (inflation). It may not be for 5 years but it will come.

Diversification is the only way to hedge uncertainty in the long run. If you like equities you must also keep cash and maybe even a commodity hedge against hyper inflation. If you like gold you must keep cash and equities too. If you like cash you must buy something else to at least make up for the ravages of inflation. Although recomendations by people are lopesided and inclination may spuryou to only believing one thing will happen, even if economic currents turn one way you can't discount politicians, wars, or monetary policy decision makers from fixing or ruining things (eternal uncertainty). Trust the economic trend maybe. Trust politicians, 3rd world country dictators, or unelected fiscal decision makers... ummm right.