Wednesday, December 30, 2009, 2:44AM ET - U.S. Markets open in 6 hours and 46 minutes.

Ben Stein How Not to Ruin Your Life

Ben Stein, How Not to Ruin Your Life

How to Ruin Your Morning

by Ben Stein

Email this Page IM this StoryBookmark this StoryAdd to your Del.icio.us accountDigg this StoryPrint this Story
Very Good (752 Ratings)
3.1835048/5
Posted on Wednesday, November 5, 2008, 12:00AM
A few nights ago I did one of the most sensible things I could think of to do. I went to bed very early. The result was that I woke up feeling great and ready for a nice day. The weather was gorgeous at my home in  Malibu and I could smell a tang of fall in the air coming off the ocean.

Then I decided to ruin it all by filing the past few months of  stock transaction receipts. I get them online as well in the form of confirmations from my broker, but I like to review them in paper. Or, I should  say I once upon a time liked to review them.

Now, they're a catastrophe. 

My losses are staggering even in the most plain vanilla index funds. In the emerging markets and developed markets, investments that had once provided immense gains, the  losses are worse. Even in my beloved RQI, the high-income, leveraged REIT index  fund, the losses are beyond belief.

Instead of just jumping off my  balcony, which wouldn't get me more than a broken leg, I am going to try to make some sense of what has happened.

First, although my colleague, Phil DeMuth, and I always wrote in our books that investors should have a huge slice of bonds, two problems happened to me. One, I had too many corporate  bonds. Although they did not get hit as hard as stocks, they did not hold up well at all. Second, I should have had a huge dollop of Treasury short-term bonds. If I had held half of my savings in short term Treasuries, I would have  lost only half as much.

I do hold a fair amount of cash, and that has been a saving grace. But I kept telling myself I would hold bonds aplenty when I retired not before. But I now see that I should have been holding roughly half in insured cash or Treasury short-term instruments.

I am little by little working towards that goal. The problem is that I do not want to sell when the market is so far down. In fact, I want to buy. The emerging  markets are down to comically low levels (though of course they can always go lower). 

The developed nation stocks are discounting the mother of all recessions and  then some. My beloved RQI is so low that it is yielding roughly 25%. Even if its dividend is cut, which would not be a big surprise, it is still yielding over 10%, a nice thing for an old guy like me.

So, where do I go? I am  trying to do three things:

One, save more in Treasuries, short term of course. Two, I am trying to buy the most beaten down index funds as ETFs,  especially EEM, EFA, VTI, SPY, DIA, and, of course, RQI. Now bear in mind that RQI is leveraged and leverage has been very dangerous lately. But even  if the leveraged part of RQI failed and it had to liquidate (which I do not foresee but then I missed a lot), it is trading far below  liquidation value. So it should pay off more than its recent price.

Phil DeMuth and I have found that when a security is trading for far below its historical  price, it usually has a strong recovery. Or, I can put it another way: if I  liked it at X per share, I have to love it at one fourth of X. That is, unless  the world is coming to an end and I don't see that at all.

The financial crisis is still unfolding but I am  convinced steps will be taken to calm the derivatives and mortgage crises and we will endure the likely coming recession to a brighter tomorrow.

But if we don't, I will have those Treasuries and insured cash. I also like a lot variable annuities that give you a big slice of the upside when and if the  market rallies strongly and guarantees your floor at your entry price. These are not cheap but the hedge they offer is life saving.

Lastly, I am trying to enjoy life so that I am more than the mere composite of the stocks and bonds I own. I hate myself for being so dependent on how much money I have for my self image. I am  going to change that. I do not want to endlessly think of myself as worth x dollars one day and half of that another day. I hope I am more than  that.

As for retirement, well, I get sick and bored if I am not on the  road most of the time anyway making new friends and talking to good people.

But to get back to money: history tells us we can have long dry  spells in stocks. It also teaches that markets can way overshoot on the way down (and on the way up). Unless something even more horrible than the derivatives  crisis lurks out there, stocks look cheap now. But cash and Treasuries offer peace and the ability to sleep at night.

Yes, stocks are more fun on  the way up, but on the way down, they can ruin your whole day. One more thing: the reason I am not suicidal right now is that I have a wife who would be fine  with it if we had to live a more modest life style. Try to find a life companion like that.

 

Email this Page IM this StoryBookmark this StoryAdd to your Del.icio.us accountDigg this StoryPrint this Story

Rate This story

Very Good (752 Ratings)
3/5
Sign-in to rate!

572 Comments

Showing comments 6-35 of 572<< PreviousNext >>
Sort: first to last

  • replicator - Saturday, November 22, 2008, 7:15PM ET  Report Abuse

    • Overall: 4/5

    I like the advise on the companion at the end of the article. Thank You Ben. And I love your Carl Jocobi style of thinking.

  • Victor - Monday, November 17, 2008, 10:49AM ET  Report Abuse

    • Overall: 1/5

    I didnt even read it. I watched a youtube video of ben recommending financial stocks about a year ago. he laughed Peter Schiff of the panel who recommended keeping away from financials. Ben, you can through away your money, bit stop hurting others with your clueless opinions.

  • Jarod - Saturday, November 15, 2008, 11:24AM ET  Report Abuse

    • Overall: 1/5

    Ben, you denigrated Peter Schiff for his predictions, and recommended people purchase financial firms in August 2007. Schiff's predictions have since been borne out by actual events, while yours have likely cost more than a few people their retirements. All of this may have been excusable if it had caused a paradigm shift in your way of thinking about the economy, but the reality is you continue to embrace the same narrow view you had before this crisis. You demonstrated this by heaping the blame on the CRA, Fannie and Freddie for causing the sub prime mess. Now I agree that the CRA and the government mortgage giants played a supporting role in the sub prime mess, but as you rightly noted the value of the ACTUAL sub prime mortgages was relatively small and could have been dealt with. The problem only became threatening to the economy as a whole when the financial firms began piling layer after layer of credit defaults on top of these mortgages and mortgage backed securities and followed it up by synthesizing additional CDOs from the swaps themselves. That's how a few hundred billion dollar problem becomes a 50 trillion dollar problem. The root of this crisis isn't poor people being given credit to buy homes they couldn't afford. That is merely one of the many symptoms of a nation collectively living beyond its means, fueling an economy based on consumption and debt instead of production and investment. We were shown the better, more difficult path three decades ago, but we chose to collectively live beyond our means and we and our children are now reaping the consequences of that decision.

  • Iouri - Friday, November 14, 2008, 9:36PM ET  Report Abuse

    • Overall: 1/5

    Ben please watch this: http://www.youtube.com/watch?v=2I0QN-FYkpw

  • Yahoo! Finance User - Friday, November 14, 2008, 5:23PM ET  Report Abuse

    • Overall: 1/5

    Before you take any of Stein's advice, watch this video: http://www.youtube.com/watch?v=2I0QN-FYkpw He needs to go back to hosting game shows and leave investing to Peter Schiff. I hope you took your own advice on the financials Stein!! Yahoo, please get rid of him!

  • Yahoo! Finance User - Friday, November 14, 2008, 2:44PM ET  Report Abuse

    • Overall: 3/5

    Ben, how is it that you never learn? Do you care to address some of your comments in this video: http://www.youtube.com/watch?v=2I0QN-FYkpw Peter Schiff and others have told you what is going to happen. Their simple, common sense analysis, was almost 100% correct, and yours was almost 100% wrong. Despite this, you still seem to be unable to recognize that your world view is funndamentally flawed. This is not like previous downturns or recessions, the numbers are so much worse this time. How anyone can think this is a minor blip and all will be well soon astounds me, unless you have put no thought into it whatsoever. I would really like to see you publically address some of your previous comments.

  • Yahoo! Finance User - Thursday, November 13, 2008, 9:28AM ET  Report Abuse

    • Overall: 1/5

    I like Ben Stein, so it's nothing personal. BUT... he's one of the mainstream, everything's going to be okay, the glass is half full, we're not going into a recession!... not going into a depression!... blah, blah types, who have been completely WRONG. A huge economic shift is occurring. A few, Peter Schiff, the former head of the GSA, Walker, and some others, have been warning of this. Sure, there's always the sky-is-falling types to not be taken seriously. But, the warnings that have been given are based on common sense and easily known facts. Ben suggests buying because things are so cheap. That, if you liked something at X, then it should be even better at 1/4th X. Yet, that only shows that it wasn't a good idea to have liked the something at X in the first place! And with that track record, liking it at 1/4 X (let's call that Y) may only mean Ben would like it even more so at 1/4 Y.

  • Yahoo! Finance User - Thursday, November 13, 2008, 8:57AM ET  Report Abuse

    • Overall: 5/5

    Maybe its not that important that we are worth maybe 30% less today that a year ago. Pretty much everybody else is in the same situation and because of that the world is maybe 30% cheaper! So, at the end, whether the market go up or down it all comes back to a matter of relative performance.

  • Jack F - Wednesday, November 12, 2008, 9:27PM ET  Report Abuse

    • Overall: 1/5

    Yahoo should be absolutely EMBARRASSED to have an article by Stein. Please watch this video on Youtube. Your dog knows more about this economy. http://www.youtube.com/watch?v=gL8BzZnWRX4

  • Yahoo! Finance User - Wednesday, November 12, 2008, 8:36PM ET  Report Abuse

    • Overall: 1/5

    Ben, maybe you should have taken Peter Schiff's advice instead of opposing his opinion... http://www.youtube.com/watch?v=2I0QN-FYkpw

  • Gary - Wednesday, November 12, 2008, 8:30PM ET  Report Abuse

    • Overall: 3/5

    you see things others may miss. i sense you are beyond the dollar signs and seek something that has more value than money. money is important, yes, but not in an ultimate sense. thanks for being "balanced" in the finest sense of the word. words are important.

  • Esther - Wednesday, November 12, 2008, 8:26PM ET  Report Abuse

    • Overall: 2/5

    He is wrong again saying the stock is so cheap now. But the story is entertaining. Do opposite to what he does and save your day.

  • Yahoo! Finance User - Wednesday, November 12, 2008, 2:19PM ET  Report Abuse

    • Overall: 1/5

    Hey Ben, If you jump off your balcony head first, you'll have better results for both us and you. I have GAINED 12 percent in my portfolio this year after not listening to jackasses talking about the "new economy" and I would never claim to be an expert.

  • OK - Wednesday, November 12, 2008, 1:39PM ET  Report Abuse

    • Overall: 1/5

    I wish I still had the opportunity to "Win Ben Stein's Money". I'd use it to take a flight down to Malibu, kick Mr. Stein in the groin and write a yahoo article about it. It would be more interesting than this!!

  • Ken - Wednesday, November 12, 2008, 1:30PM ET  Report Abuse

    • Overall: 5/5

    Just my thought on a NEW BAILOUT IDEA... Why can't the government help everyone else instead of the people who are in trouble? Imagine this... through government intervention, which is already in place with the $700B bailout, 1. GOV'T SPONSORED LENDING: Working through banks, force the 30 yr mortgage lending rate to 1 or 2% for everyone using taxpayer money. It may even work with 3%, but please keep reading. 2. Allow people to refi if they wish to do so. 3. ENSURE THE TERMS ARE RESONABLE AND THAT PEOPLE CAN REPAY. 20% down etc. 4. Ensure banks will not make too much on the easy money with their crazy fees, but will make enough to stay in business. 5. REGULATE THE CRAP OUT OF IT SO IDIOT BANKS DONT END UP WHERE THEY WERE AGAIN!!!!!!!!!!!! 6. Probably other things will need to be in place, but this is the main idea. BENEFITS: 1. 95% of people with good credit and good standing can refi legally without ruining the credit system. this gives money to the economy to get restarted. 2. This will bring buyers out of the woodwork to buy new houses. 3. This will keep a % of the foreclosures from happening because the borrowers could refi into more reasonable terms. 4. MORE CHANCE "THE PEOPLE" GET PAID BACK WITH THEIR TAX MONEY AT RISK. It will guarantee that money will likely get paid back to the people UNLIKE the current $700B bailout. 5. There are plenty more benefits, too many to list here. 2nd way to implement this idea: You could even do the GOV'T SPONSORED LOANS in steps by starting at 5% and see where it goes, if it is not enough drop to 4%, then to 3% and keep dropping until the refi biz can get the economy back on its feet. In this 2nd scenario, the kicker will be that borrowers will not know how low the gov't will go thus spurring refi's at every level until the economy picks up. It may never have to reach 2%.

  • Andrew - Wednesday, November 12, 2008, 10:34AM ET  Report Abuse

    • Overall: 1/5

    Of course he's one of Yahoo's "experts". That's why, after telling us the ideal asset allocation, right down to the specific ETFs (and annuities whose industry he has a vested interest in), he now tells us how is allocation was wrong!

  • Yahoo! Finance User - Wednesday, November 12, 2008, 10:32AM ET  Report Abuse

    • Overall: 1/5

    Sick duck finally realized he is SICK! How many times have you called to BUY in your drivels! Hope you find solace iwith your sick wife too! There's blood in there streets, BUT wait till there are bones left, then it's time to BUY!

  • Sean - Wednesday, November 12, 2008, 10:17AM ET  Report Abuse

    • Overall: 1/5

    “The weather was gorgeous at my home in Malibu and I could smell a tang of fall in the air coming off the ocean.” Good lord this man has absolutely NOTHING relevant to say to 99.9% of America. Keep up the great work Yahoo. No wonder your stock is in the crapper.

  • Barry - Wednesday, November 12, 2008, 10:02AM ET  Report Abuse

    • Overall: 1/5

    no useful information here. not terrible, just no discernible reason to read this.

  • Josh - Wednesday, November 12, 2008, 10:00AM ET  Report Abuse

    • Overall: 1/5

    This guy is an idiot

  • Yahoo! Finance User - Wednesday, November 12, 2008, 4:11AM ET  Report Abuse

    • Overall: 4/5

    Deleveraging is what taking place now, the stock market, housing, business have all been propped up by margin trading and borrowed funds. Where do think the last stock run up came from 03-07 and the excesses stemming from all asset bubbles including housing, i.e so where is this money going to come for the next stock market run up. Its unprecedented and to say otherwise could mean trouble. The Dow 5000? Has anything surprise you so recently, so why not.

  • Yahoo! Finance User - Wednesday, November 12, 2008, 3:27AM ET  Report Abuse

    • Overall: 5/5

    5 stars because Ben hates himself, now he knows how the rest of us feel about him.

  • greatdepression - Tuesday, November 11, 2008, 10:41PM ET  Report Abuse

    • Overall: 3/5

    I've been reading your advice Ben, and it was never good. You were a deer in the headlights and didn't want to listen to anyone. Does anyone want advice? I've actually been able to time a large majority of the major highs and lows of the last year within 1 day. It's not easy but it's definitely possible. I just can't believe the number of people that don't believe it's possible or have no interest in predicting the stock market. It just shows how stupid and irresponsible people are with money. I'd like some advice from you Ben. What do you do if you can actually predict the future but nobody would listen because they're too caught up reading your articles?

  • Yahoo! Finance User - Tuesday, November 11, 2008, 7:22PM ET  Report Abuse

    • Overall: 1/5

    http://uk.youtube.com/watch?v=2I0QN-FYkpw Watch it - this is all you need to know about Ben Stein! Hahahaha Merril Lynch???

  • Jim - Tuesday, November 11, 2008, 6:45PM ET  Report Abuse

    • Overall: 1/5

    How to ruin your morning? Easy, actually follow this bozo's advice. As Bugs Bunny would say, "What a maroon - what a nincompoop!" I just can't believe how many gullible people there are who actually believe that predator's like BS and Sir Larry Kudrow are actually trying to help them. You should just flush your money down the toilet and save yourself the trouble fo going online to read his drivel. Remember when he liked Merril at $76? it's now under $15!, Remember when he said that oil was going up whenit was around $88 per barrell? If you are dumb enough to actually follow BS, you only have yourself to blame.

  • Yahoo! Finance User - Tuesday, November 11, 2008, 3:52PM ET  Report Abuse

    • Overall: 2/5

    The stock market went. And make no mistake about it, it will fall further. The banks are next. FDIC money is being used to "buy bad debt". Two words for everyone... Buy gold.

  • Christy - Tuesday, November 11, 2008, 2:06PM ET  Report Abuse

    • Overall: 2/5

    Go to cash after the market is 40% down!..come on Ben you can do better than that. Let's see that Ivy League education kick in.

  • Yahoo! Finance User - Tuesday, November 11, 2008, 10:49AM ET  Report Abuse

    • Overall: 5/5

    The best advice was in the last paragraph.

  • Michael - Tuesday, November 11, 2008, 10:23AM ET  Report Abuse

    • Overall: 1/5

    These financial columnists are as dishonest as politicians. They are paid to say upbeat things by the advertisers that appear beside their names. Consider this: A 27 year old relative of mine works as a bond trader. July of 2007 he said, "the credit markets are terrible. The stock market keeps going up but I would get very defensive and move to treasuries. Now if a 27 year old can figure that out why can't the experts. Answer: they are not experts. They got lucky once (Ref: Nicholas Taleb and Fooled by Randomness).

  • Bilko - Tuesday, November 11, 2008, 9:52AM ET  Report Abuse

    • Overall: 5/5

    At this stage of the collapse I just like to hear from Ben, as Londoners do to Big Ben. Oh, and speaking of time - at what time does this downward trend end - anybody? I'd like Ben to tackle that issue sometime based on the past...which I think may take us back to the dirty 30's!

Showing comments 6-35 of 572<< PreviousNext >>
The columns, articles, message board posts and any other features provided on Yahoo! Finance are provided for personal finance and investment information and are not to be construed as investment advice. Under no circumstances does the information in this content represent a recommendation to buy, sell or hold any security. The views and opinions expressed in an article or column are the author's own and not necessarily those of Yahoo! and there is no implied endorsement by Yahoo! of any advice or trading strategy.

More From Ben Stein

The Baby-Boom Retirement Crisis And How to Beat It

Let Ben Stein show you how! Stein outlines the steps you can take today to assure your future tomorrow.

Don't leave middle age without it!
Only $16.77 plus S&H

More from Yahoo! Sources

  • CNN Money
  • Consumer Reports
  • Kiplinger
  • The Motley Fool
  • Business Week
  • Wall Street Journal

Historical chart data and daily updates provided by Commodity Systems, Inc. (CSI). International historical chart data and daily updates provided by Morningstar, Inc. Fundamental company data provided by Capital IQ. Quotes and other information supplied by independent providers identified on the Yahoo! Finance partner page. Quotes are updated automatically, but will be turned off after 25 minutes of inactivity. Quotes are delayed at least 15 minutes. Real-Time continuous streaming quotes are available through our premium service. You may turn streaming quotes on or off. All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.

Yahoo! Answers is provided for informational purposes only, and no Q&A is intended for trading or investing purposes. Yahoo! shall not be responsible or liable for the accuracy, usefulness or availability of any Q&A information, and shall not be responsible or liable for any trading or investment decisions based on such information. View Complete Answers Disclaimer.