Time to start thinking Financial Conservation!
An infinite amount of time and resources are spent in making the language of conservation universal in its reach. As a result, the basic necessity of mindfully conserving and not wasting our natural resources has been firmly established. The Green Message is Everywhere. And we have seen how this message is truly effective when directed at the grassroots individual level.
It would be a small step, not a great leap, to apply this pervasive awareness of the core principles of conservation to our individual financial resources that are finite and equally important to our basic survival and quality of life on this planet. In so doing, we will provide a more reliable foundation as well as the example necessary to help ensure that current and future generations are prepared and equipped to Stay in Step with the Life Cycles.
It cannot be determined by anyone with certainty ahead of time how the timing of the markets -- up phase or down phase -- in any asset class will stack up against the timing of an individual's unalterable life cycles and the various levels of life responsibilities and obligations that kick in at each stage. Consider Core Asset Conservation whereby you first distinguish your core financial assets -- those assets necessary to keep you in step with the life cycles -- from non-core financial assets. Place core financial assets in financial vehicles that guarantee -- up front -- Safety of Principal and Locked-In Gains as achieved. Diversification of risks is a concept best applied to remaining non-core financial assets.
Granted this is not an approach suited for everyone, but neither was the much touted notion of "diversifying risks" of all of an individual's assets -- both core and non-core -- through the popular asset allocation models that lead many to believe they were protected and would have the money they were relying on to meet their various life needs as they arrived at the later stages of life. This obviously turned out not to be the case on a massive scale and a great number of people reaching across generations have been severely and, in many cases, unalterably damaged.
It is the trader/speculator mindset that created and dominates the current as well all other volatile economic environments of the past. Since we can't expect the historic profits now flowing to the savviest of the trader/speculator type to act as a disincentive to this type of behavior, it's anyone's guess as to when some kind of equilibrium will be restored to the markets. In the meantime, for financial journalist and the main stream media outlets they work for to continue telling the average investor in today's highly volatile and unstable economic environment that they are just going to have to run faster and do a better job of diversifying risks to keep up with the trader/speculators who had them "outgunned" from the start is flagrantly misleading and irresponsible.
All power and good luck to those who think they are well suited for big casino action; however, for the great many who are not so inclined or equipped and whose time and efforts for the greater good of everyone are devoted to making the real economy actually function, the playing field is not level and they remain at a distinct disadvantage.
In good faith and good conscience, more focus and attention in the mainstream media needs to be brought to this ongoing disconnect between Wall Street and Main Street.
PBS Frontline - "The Warning"