Are You a Genius or a Fool?

by Krantcents · 33 comments

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“Any intelligent fool can make things bigger and more complex… It takes a touch of genius – and a lot of courage to move in the opposite direction”. (E.F. Schumacher)  Do you move with the herd?  The real estate bubble and recession wrecked a lot of financial goals and plans.  Wait, the stock market is back, stronger than ever!  The real estate market is coming back too.  What did you do?

The recession ended roughly four years ago, but we may not know it.  Unemployment has remained high and we are slowly recovering economically.  Consumer confidence dropped to a low at the time when economists indicated the recession was over.  It has since improved with various ups and downs, but still not a return to normal.  This is due to the high unemployment.  If you are unemployed, you probably think it is a depression.

Rich or not, stabile employment trumps rich or not!  I am sure that the consumers that feel confident about the economy are spending money.  If you are unemployed, you are probably cutting back on your expenses.  You probably did not participate in the increased values in the stock market, real estate or business.  Jobs follow consumer confidence and demand!

Companies will not start hiring until they see sustained demand beyond their current capacity.  Companies are driven to achieve profits and hiring new employees before you need them will impact profits.  If individuals would think this way, they would make more money too.  Applying these principles to areas of your life will make you more of a genius than a fool.  Is it luck?  No, you have to be proactive with your life to make more money.

Career 

High unemployment changed the landscape!  The new college graduates have an awful time finding jobs.  This is nothing new, it has been going on for a few years.  There are graduates who would normally be hired into training programs who have to take anything just to find work.  How can you make yourself more marketable?  New college graduates need to show how they applied their skills to the real world.  It may be an internship (paid or unpaid), part time work or summer jobs.

Then you market yourself using a resume, networking or creating a website.  How do you show the world that you have the skills to be successful?  You shout it from the rooftops!  If you have started your career, there are accomplishments you want to market and you can use your resume to do it.  Networking and technology can help you find people who can help you in your search.  Doing nothing is not a choice!

Housing

Buying at the right time trumps any interest rate.  It is the old syndrome of buying low and selling high.  High interest usually depresses the home market.  That is why the Federal Reserve has artificially kept the interest rates low.  It is intended to encourage borrowing.  There are other factors going on simultaneously with a recession.  If you were one of the people who bought a home at the bottom, you should be very happy right now.  If you were one of the people who bought before the real estate bubble burst, you may be underwater.  20/20 hindsight is great!

Stock Market

It wasn’t that long ago that the market dropped like a rock because of the real estate bubble bursting and the recession.  If you got out of the stock market as many did, you missed out on the roaring bull market!  Will it continue forever?  Of course not, but I do not time the market anyway.  Whether the market is rising or falling, there are always ways to protect yourself.  It is called an asset allocation.  A good asset allocation will make you seem like a genius!

Some of the companies that that are doing well are the kinds of companies Warren Buffet likes.  In this case, they are defensive stocks such as healthcare, consumer staples, and utilities.  Is this a trend or just another choice in the stock market?  Are you a genius or a fool?  I see it as a choice when putting together your asset allocation.  Asset allocation  is an investment strategy that aims to balance risk and reward by apportioning a portfolio’s assets according to an individual’s goals, risk tolerance and investment horizon.

Final Thoughts

This is just reflective of a point in time similar to measuring your net worth.  You calculate your net worth on the last day of the month or quarter and it indicates a value for your assets and liabilities.  Your net worth may have increased or decreased.  It is best to measure your progress at routine intervals to fairly assess your progress. You can look like a genius or a fool, but it is up to you to learn from each experience.

Sometimes, you are just lucky!  For example, I downsized at one of the best times fifteen (15) years ago.  I bought when the market was low and sold my home when the market was rising.  Was it luck?  No, I knew it was the time to buy, but not to sell.  I kept investing in the stock market while it was going down and I am now watching it go to a new high.  I am not a genius, but I am not a fool either!

Photo by:  mrsdkrebs

 

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{ 30 comments }

Holly@ClubThrifty May 21, 2013 at 4:49 am

I don’t think that I’m necessarily a genius or a fool. However, I do think that I’m extremely lucky.
I’m also a hard worker which has made more opportunities come my way.

Krantcents May 21, 2013 at 6:56 am

There are probably a lot of people in between! When things go well or badly, it feels rather lonely hence the description.

Greg@ClubThrifty May 21, 2013 at 4:50 am

“Buying at the right time trumps any interest rate.” Isn’t that the truth? Luckily, we bought all of our property on the way down AND we live in the Midwest, so we didn’t take too big of a hit. We didn’t buy at the bottom, but we didn’t buy anywhere near the top either.

Krantcents May 21, 2013 at 6:57 am

You can always refinance, but the price is the price. In California, it determines the property taxes and that can haunt you forever.

Money Beagle May 21, 2013 at 6:11 am

Once the stock market started dropping back in 2008-09, I had a feeling it was going to go much lower, but I didn’t sell because I didn’t want to realize the losses that had already hit. If I would have followed my hunch, I would have spared myself quite a big further loss. I’m always a believer in the stock market so I know I would have gotten back in as well. While I’ve since recovered, I’ve always thought that my net worth probably could have been 33% higher had I followed my hunch. Oh well.

Krantcents May 21, 2013 at 6:59 am

I am convinced that I would always time it wrong, so I never try.

John S @ Frugal Rules May 21, 2013 at 7:04 am

Good post! I don’t know that I am either, but I do plan and make sure that the actions we take are measured and prudent. Like Holly, I am a hard worker which does help bring about more opportunities.

Krantcents May 21, 2013 at 7:27 am

There are always opportunities, however we need to recognize them.

Mike@WeOnlyDoThisOnce May 21, 2013 at 7:49 am

Brings up the interesting point of nature versus nurture. Impossible to accurately measure, it seems, without parallel universes for the reason that each human is individual.

Krantcents May 21, 2013 at 10:12 am

There are many times, I would love to run that experiment and can’t for obvious reasons. The bottom line is I feel really good when things work out and bad when they don’t. I am not a genius or a fool!

Kyle @ Debt Free Diaries May 21, 2013 at 8:19 am

I don’t think I’m a genius, but I like to think I have some basic common sense. I’m not necessarily making active investments in stocks or the housing market right now, but when I am ready I’d like to use that common sense (much of what you described in your post) to make smart money choices.

Krantcents May 21, 2013 at 10:13 am

Thanks, I think the approach is everything. You will know fairly quickly if your choice is good or bad and learn from it.

Pauline May 21, 2013 at 8:42 am

Great point about real estate, I was trying to explain that to my mum recently, as she is considering buying a property, but it is hard to grasp as a concept when everyone is selling you high prices that will only get higher.

Krantcents May 21, 2013 at 10:16 am

Normally prices are depressed when interest rates go up because of affordability. One of the problems of a heated housing market is the thought that prices will always go up. The recent housing bubble showed us it won’t.

Thomas @ YDF May 21, 2013 at 12:01 pm

Im not a genius but have enough sense to try and not make a fool of myself. If I don’t know something I read up or ask someone who is successful at what I want to be doing. People make money in both down real estate and stock markets. Just need to have a better understanding of when to get and knowing what you ‘don’t” know.

Krantcents May 21, 2013 at 12:52 pm

Very true! As we get older, you start to realize that there is much you don’t know. Realizing it and taking the appropriate action is a learned response. Doing nothing is a bad choice.

maria@moneyprinciple May 21, 2013 at 3:14 pm

Aspiring genius! Have been simplifying all around me and my academic articles always have to be elegantly simple in their solution; after the messy complexity that is :) .

Krantcents May 21, 2013 at 5:01 pm

I like that! I think that making complex issues understandable or simple is the ultimate solution.

CashRebel May 21, 2013 at 3:32 pm

I certainly know im not a genius, so I don’t ever try to time the market. That would make a fool. Im just smart enough to know that I don’t know enough to pick individual stocks.

Krantcents May 21, 2013 at 5:02 pm

I agree, that is why I don’t even try.

AverageJoe May 21, 2013 at 8:13 pm

I’ve been both! I bought a house at the tippy top of the market, thinking that we’d live there for a long time. Oops. BUT then I sold my asset-based financial biz two months before the market collapsed in 2008. Cha-ching! You’re right on: I’ve learned tons from both of these experiences.

Krantcents May 22, 2013 at 6:52 am

I know what you mean! I think we do a mixture and it averages good or better.

Squirrelers May 22, 2013 at 7:10 pm

I’m no genius, but I sure hope I’m not a fool too often! :) Really, sometimes it’s a matter of avoiding big mistakes and doing the little things right every day that can get people surprisingly far in life.

Krantcents May 22, 2013 at 7:16 pm

We all make mistakes, but they get smaller and smaller, if you are paying attention.

Thomas May 23, 2013 at 11:55 pm

Well, I’m happy to be both, as long as long as I don’t make any losses be it in real estate, stocks or other investments.

Krantcents May 24, 2013 at 6:56 am

I realize I am neither, but it is a matter o perspective. Over time, I achieve good returns because I have a plan.

Rob @FinancialSprout May 29, 2013 at 2:10 pm

There are two different types of smart out there, book smart, and street smart. Some of the smartest people I have ever met are some of the most uneducated rednecks within the county lines. On the other hand I have met some pretty dumb people who have several titles after their name. I think that everyone is a genius at something, whether it is a math genius, or a mechanical genius, everyone has an area of which they excel. Genius is an arbitrary word.

Krantcents May 29, 2013 at 6:03 pm

I agree with you, there are many people good at various things. I have success in many area of my life and I owe it mostly to hard work and planning.

Isaiah Page June 3, 2013 at 6:44 am

warned of the threat of a bubble and the economic stagnation that would follow. In response to fears of a bubble, in the summer of 2011, Standard & Poor’s downgraded its outlook for China real estate development sector to negative from stable, following a tightening of credit conditions in the country and slower sales.

Krantcents June 3, 2013 at 7:01 am

What changes you make to handle what comes up will make you a genius or a fool!

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