stlplace

The other day my wife asked me an interesting question: how long will the recession last? I think her implied meaning is how long the job market will be like this (with unemployment rate reach 10%)? I thought about it, and my answer is it could last 2 to 3 years. But on the other hand, I am not too worried about our lives. Because we both got our skills, and we will survive. A few weeks ago I read this article from WSJ titled “The ‘Democratization of Credit’ Is Over — Now It’s Payback Time”. Basically it’s saying the lower income consumers (borrowers) are having more trouble in terms of paying back debt, or getting new credit. The picture below (from WSJ) shows the problem well.

I was a little busy recently, due to many reasons. Thus I did not paid much attention to stock market in the past week, and the big drop in last 6 trading days did not concern me as much (due to distance), another reason is I sold some stocks before and during those days, so I think I am OK.

Why I am selling stocks
Obviously not trying to timing the market. I was the worst market timer, as I ran out of cash in early March (all in stocks at the time, stocks like Berkshire). The main reason I sold stocks is I want to have some liquidity, not that I did not need it in the past, but now liquidity becomes more important as we are expecting our first baby early next year (see my wife’s blog).

How I think about stock market and economy in general
Obviously my opinion does not count much, we already got so many knowledgable people, from President to economist, trying to predict what’s next. Here is my simple take, for what it worth.