For those of you who enjoy a good cigar, the following story will be rather easy to follow. For those of you who do not, it will still be easy to follow. So let’s get started. I would like to demonstrate how my smoky pastime mirrors what’s going on in the economy. More importantly, is how my story will also illustrate how to handle this market. So on occasion I enjoy a good cigar. I have also discovered that a number of my clients also enjoy a good cigar on occasion. So giving cigars as small gifts to my clients has become a fun hobby. I realized that buying the cigars buy the box is very cost efficient. To the point where I could give away quite a few and still save money compared to buying them individually. Problem is that once you have them, they need to stay in a humid and preferably constant temperature environment to keep them fresh. Once they get hard and dried out they are no fun to smoke, so keeping them moist and happy is key. This story will pick up soon. So I receive as a birthday gift a large lovely humidor. (A humidor is the box that you keep cigars in to keep them fresh. You set it up so inside the box stays nice and humid.) Cigars are nothing more than processed tropical plants and like to stay tropical. I prepared the humidor, what’s referred to as seasoning it. (Not all that different than seasoning a pan.) Then go about buying some of my favorites to store in there. Everything seems to be going along just fine.
This last part is what you have been doing in the market. You take the time to save and invest. You try to be prudent and pick quality investments and you know you have enough time to invest for a while. This is very similar to my buying in bulk to save money and creating the right environment for my cigars, just like the right environment for your money to grow. Here is where my story gets bad. I did not season my humidor quite enough and the humidification device that came with my humidor was not big enough to handle the volume. My humidor is larger and the same humidification device is used for my smaller humidor as well. Everything seemed to be working fine until one day I lift the lid to check on my cigars only to find the humidity way too low and a pile of dried out cigars. This is the same point where the market went bad. We did what we were supposed to do, but we did not know the trouble brewing with the subprime lending mess, and the number of people fudging the numbers at big companies to make themselves look good. All of this came crashing down. Two thousand and eight was not a good year, but the fourth quarter is where most of the damage occurred. Oddly enough that is exactly when I discovered my cigar issues. A lot of people did the right things and still got burnt by this market. A collection of things working together and against them that they had no control over.
So what to do? Well I could have gotten mad and thrown out all the “ruined” cigars. Just like you can get mad at the markets and pull all of your money out and never invest again. I didn’t throw out my stogies and I don’t think you should give up on the markets and investing either. You see, you can bring dry cigars back from the dead. You have to give them the proper moisture and time. It usually takes a few months of some TLC and vigilance but they do moisten up again and make a comeback. Markets come back as well. It will take more than a few months, but then again they are not just plants. Now is the time to fix anything that isn’t working in your portfolio. Rebalance and adjust your strategy. If your investments are not appropriate for you then get rid of them now and invest in something better suited to your situation. This can work in your favor. You may be able to get a tax loss write off and buy a better investment while the price is down, (making it on sale.) Once you do the correct adjusting and planning, it will require patience and time to fix the situation. The problems weren’t created overnight and neither will be the solutions. So my cigars are already starting to come back and I am pleased. It only takes a little progress to give people hope. I think that 2009 will be better then 2008, but it won’t be a smooth trip. Rather it will be more rollercoaster-like, but with any luck this year will be better. That can signal the start of the comeback. Just remember that patience is quite a virtue. Until next time, happy investing and try not to be so stressed. No one ever said it was going to be easy, but in the end you will be better off.
