Yesterday I was asked by a foreign news publication some questions about my reactions to the current financial problems in the US markets. As I wrote my responses, I thought to myself “this is so boring that there is no way that it will be published”. I have no juicy stories of hoarding gold, selling all my stocks, or fleeing to ultra-safe bonds. Instead, here are my Ambien-like responses:
What have you been doing to protect your assets since last summer (when sub-prime mess hit financial markets)?
Nothing, really. I keep the same general asset allocation and haven’t sold anything. I already have investments in inflation-protected bonds and broad stock index funds, so I am not worried about short-term losses.
To avoid investing losses, in trading, what kind of financial products (like stock/bonds/REIT and so on..) did you sell? and what did you buy instead? How did you change your asset allocation?
I did not change my asset allocation at all, as I still have a long-term investing horizon.
Have you changed your thoughts about investment under current crisis in financial markets?
No. I did consider adding some commodities for additional inflation protection, but I ultimately decided against it.
Have you been negatively or positively impacted by the current financial crisis?
Negatively, I suppose. Besides the drop in my investment portfolio, my house which I bought recently will probably decrease in value over the next year or two.