Archive for October, 2011

Third Quarter, 2011 Investment Review

Tuesday, October 11th, 2011

Trade-offs

“Capitalism is inherently disinflationary and leads to cycles of boom and busts”.  – Keynes’ General Theory of Employment Interest and Money

Uncertainty is a natural part of our world touching all aspects of life – from birth to death, from buys to sells, and everything in between. Lately, uncertainty hasn’t been this high since tomorrow – to paraphrase a term used in March, 2009. After a 12 and 14% third quarter drop in the DJIA and the S&P 500 index, respectively, it is not extraneous to remind ourselves the purpose for investing surplus money (amounts that exceeds our current lifestyle needs or desires). Generally, we save so that we can afford to buy, give, or pass along sometime in the future a greater amount than we can today. By investing those savings now, we aim to have a greater real amount (after inflation and taxes) in the future as well as be compensated for the risks (uncertainty) of investing the money for some time.

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