Why am I up 82% for the year?

I have a lot of friends and acquaintances who think I am rather smart, even very smart. And with the exception of this post, I'm even considered rather modest. I have an MA in Economics. I've worked as an economist in the Canadian Ministry of Finance and Statistics Canada. I've been paid more than a million dollars as a business and data analyst at Morgan Stanley in Manhattan. But no one ever listens to my financial advice. 

When I've told friends they should sell at least some of their dot com stock, they've hung on, sure it was going to go up to peaks again, instead of down to nothing. When I've told my friends, at just the right times, they should sell their houses and rent, they just tell me there's one more special deal to do, or it is not the lifestyle they want. When I've told them they should get out of the US economy and enjoy the 80%+ returns in India and China, they've ignored me. And when I told them I was selling everything and holding cash, they've stuck with their portfolios. To be honest, I don't really bother anymore. No one listens. But it irks me.

But I do want to point out one unassailable fact for those who never listened. On January 17th, 2008, I sold all my retirement investments and put it in cash (sometimes diversified into multiple currencies). It is what I told anyone who would listen to do. I wasn't giving radical advice, or risky advice (like shorting). If I had been wrong, all I was going to give up was what was clearly going to be modest growth at best. I actually would have done it sooner, but Fidelity blocked trades for weeks while they processed a request to transfer from a 401k to an IRA. That simple, simple, simple little action put my wealth 82% higher today than it would have been if I had done nothing. 

Avoiding a loss may not be sexy, but the counterfactual return I've just quoted is just as real as a gain. In fact, human psychology is such that we feel a loss far more than a missed gain.

A lot of people read this blog. But I think most of my friends rarely do. I rather hope they're not reading this. I know many are suffering. I don't want them to suffer. I want to protect them, like I protect myself. In fact, I want everyone I come in contact with to be ok. I'm not perfect. I'm often wrong, especially about timing (I expected the economy to collapse years ago). But for their own good, I wish people listened more.

So, is this the bottom? Is it time to get back in? I'm sorry to say, but I think we are not even half way through the tough times. However much you have lost so far, there is more to lose.  Look, I hope I'm wrong; but nothing about our economic situation suggests that. About two thirds of spending in the US economy comes from consumers, and they have only just begun to start feeling the real pain of this recession. I don't think every investor really understands that, especially individual investors. This will become clear to them in time, and this will drive stocks, and the economy, even further into negative growth. 

Look, I'm not a financial advisor. This is just advice from someone who cares. Don't blame me if I'm wrong. But there is no way on earth I would buy now, and that means if you have any equities you could probably cut your losses substantially by selling now too. But I'm all too aware of the old adage, "you can lead a horse to water, but you can't make it drink".