World Coming to an End? Don't Panic

The Dave Ramsey show was on today and a caller asked him if she should take out her retirement money and other funds from the stock market and buy something tangible like a house because she was sure that the stock market, and in fact the entire American financial system, was going to Hell in a hand basket. If you listen to many pundits these days, you may know why the lady feels this way. Even I feel this way on occasion. Dave was firmly against this tactic and so was I but for different reasons. Dave feels that the stock market will remain strong and that American companies are strong in general. My reasoning is that:

• Disaster coming or not, you NEVER put all of your eggs in one basket. You don't sell all of your assets and buy gold. You don't concentrate all of your preparedness efforts on a single bug out shelter. You don't invest ALL of your money in the stock market. Diversification works for the simple reason that you don't know what kind of disaster will strike and there is a very good possibility that if you put all of your money, time, and effort into one thing that you think will "save" you, it is a good bet that that one thing will be the thing wiped away by disaster.
• A house is a nice investment but like any investment, it has risks. Like black mold which isn't covered by insurance. Like an earthquake or flood which your insurance probably doesn't cover. Like you may need to move in a hurry and selling a house is a time consuming thing (not to mention sudden market drops as happened during the last year or so which can turn you "upside down" on your mortgage loan within a matter of weeks).
• I prefer to be lean and mobile as much as possible. I have seen way too many instances where people have been ripped from their fairly normal every day life and been forced to flee their city or even their country with only what they can carry. You can't carry a house, you may not have much left in your stocks if anything at all, and you can carry gold but not easily or safely.
• I can't read the future and when I gamble it is for fun and not profit so trying to guess what is going to happen then betting all of my money and assets on what "might" happen is, in my opinion, a bad bet.
• Panic is not good in any situation. It is not a good thing to act out of fear because then you make crappy, not well thought out decisions.
• Change is inevitable. Life is continual change so trying to "keep things as they always have been" in order to feel secure is futile.

So what should you do if you really think the world as we know it is coming to an end?

• Keep yourself diversified, both financially and in life. Spread your assets and investments around. Spread your learning around as well. While some people think it is a great idea to be ultra-specialized in their work (a great idea if you are a neurosurgeon or rocket scientist), consider developing multiple streams of knowledge along with multiple streams of income which will give you much greater flexibility during times of significant change.
• Determine if owning a home fits your life style. I enjoy my home and need a place to live anyway so paying a mortgage, for me, is a sensible idea. For others, like those who are deeply in debt, move frequently, or simply don't want to own a house, they should not own a house. There are plenty of other options for places to live that may fit their needs better.
• Enjoy the things you have and the things you want to have but know that you can survive just fine with less. I prefer being a minimalist while other friends have to have all of the latest everything and enjoy having lots of stuff around them. Whatever floats your boat.
• Use your own best judgement. I'm a news junkie but when it comes down to it, I will rely on my own analysis of a situation before any talking head that you find on TV or the internet. Things could get better or they could get worse. I won't spend my life worrying about what "might" happen. I will prepare as best I can but otherwise enjoy what is happening today.
• Don't panic over what "might" happen. Instead, I train and train some more and hope that "muscle memory" will kick in when I need it. A friend of mine told me his theory on worry and panic quite a few years ago and it still rings true today. When someone is worrying about something he asks them what they were worrying about exactly one year ago. 99.9% of the time they can't remember what it was. Case closed.
• Enjoy change and embrace change. People who have a good outlook on whatever happens and can easily roll with the punches usually survive much better than those who cling to the old ways and develop an all-consuming resistance to change. You can train yourself to deal with change by starting small and building up your tolerance to it. Take a different route to work tomorrow, eat at a restaurant featuring foods you've never heard of before, or try something really off the wall (apparently, as my nephew tells me, it is all the range in school these days to eat dried worms and bugs which kids can buy at the mall. How's that for embracing something new with both hands?).