Wednesday, May 30, 2012

Good Times, Bad Times

Everyone seems to be talking about changing things so the recent financial crisis does not happen again. I think that they are missing the big pictures. There has always been good times and bad times. You cannot stop life from happening.

However, what you can do it be prepared for the bad times. What governments really did wrong was spend all the money in the good times and saved none for the bad times. And, most Western countries not only spent all their money in the good times, they also ran up huge debts in the good times. If we had acted more responsibly in the good times we would not be having such a hard time now.

All sorts of financial advice suggest that we should have an emergency fund for when we hit problems. No one seems to be suggesting this to governments. It might have been better if they had.

If you want a short easy introduction to this concept, you should watch the video of Tomas Sedlacek at RSA. This video is just over 20 minutes, but it is all you need to have a greater understanding of what is going on. He makes it very easy to understand.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

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