With UK interest rates now down to 0.5% and the dubious-sounding quantitative easing moving from a standing joke to official Bank of England policy, there’s no doubt we’re living through enduring historic times.
If like me you ever wondered what it was like to work through the 1970s Winter of Discontent, let alone the Great Depression, you may soon be repenting your curiosity at your leisure.
Only today we learn that the UK Government is upping its stake in Lloyds (a company whose shares I once prized for their stability, before selling prior to the HBOS merger) to 65%, in return for insuring £260 billion of toxic debt.
When a 200-year old bank has to be repeatedly bailed out by the Government, you know you should be keeping the newspapers for your grandkids.
Yet let’s not get too downhearted.
For those still building up their savings for retirement (and I suspect that’s most Monevator readers), low prices for assets are a net positive if the world doesn’t end.
Warren Buffett has said this many times, and he said it again this week in his 2009 letter to shareholders:
We enjoy such price declines if we have funds available to increase our positions. Long ago, Ben Graham taught me that “Price is what you pay; value is what you get.” Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.
“Funds available”, eh Warren? Ah, but there’s the rub.
I’ve been invested throughout most of the bear market, even as my income has been hit by some fun yet unprofitable side projects (not least, this very blog!) and a slight drying up of the consultancy and freelance income that pays my bills.
My hope is that the renewed misery that pushed the FTSE 100 below 3,500 this week will last until April 6th, and the start of new ISA season.
I’ll be putting in my full £7,200 ISA allowance and keeping my faith in shares for the long-term.
As for the short term? Pick a number, any number…
