A small personal note from a quiet Sunday morning

I gather that for most employed people the financial crisis has had negligible effects. I am however one of the investor class. As a retired man, I live almost entirely on the proceeds of my stockmarket investments. And about half of those investments are in Australian bank stocks. So I am in big trouble, right?

Not at all. One reason why I invested heavily in banks was that Australian banks had big meltdowns at the time of the Hawke/Keating deregulation. Most of the State banks went broke and even Westpac tottered a bit. And that all happened because of incautious lending to Alan Bond and his ilk. So I figured that they had learned their lesson and were not likely to risk any recurrence of that. And I was right. The Australian banks are in good shape. Their share prices are way down but as long as the dividends keep coming, why should I worry about that? The new high is always higher than the old high so the share prices will bounce back in due course.

And September/October is dividend time so I have had a good cash inflow recently. I like to keep a fair bit of cash on hand to fund the various gifts and donations that I give out from time to time. My own needs are minimal. I mostly give direct to the intended beneficiary. Giving to charitable organizations usually just supports a herd of parasites. Most of what you give to Big Charity pays for "administration". The only exceptions I make are that I do give to the Salvation Army and to Legacy. The fact that I have some army background is probably sufficient explanation for the latter and it explains a lot of the former too. Many old diggers will tell you how good the Sallies have been in wartime. And I do have a soft spot for real Christians.

Even so, I recently found that I did have about $10,000 that I had no obvious use for so I BOUGHT SOME MORE SHARES. Why everybody is not doing so rather escapes me. Prices are very rarely as low as they are at the moment. It is a great time to buy cheap.

And my remaining cash is mostly in banks. Though I do have a few thousand in a cash management trust.

All of which, in my view, shows one benefit of managing your own money rather than giving it to someone else to manage. I can ride out the share price downturn because I don't need to sell anything. But superannuation funds and the like are always having to sell in order to fulfill their obligations to people who have reached retiring age. So they are selling at a huge loss, which drags down the funds available to everybody on their books. Not smart!

So my recommendation is just buy blue-chip stocks in your own name as a way of saving for retirement.


Posted by John Ray. For a daily critique of Leftist activities, see DISSECTING LEFTISM. For a daily survey of Australian politics, see AUSTRALIAN POLITICS Also, don't forget your roundup of Obama news and commentary at OBAMA WATCH (2). Email me (John Ray) here

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