At a family reunion 2 years ago I warned my cousins that GM and F were going to be in big trouble as oil went higher. Everyone got mad at me. My aunts and uncles all worked for them and have stock and automaker pensions. Nobody listened. At least I don't have their pain on my conscience, now. Same with trying to get my mom to go to cash and treasuries last Christmas. Oh well...
Just that the "buy and hold", and "real estate always goes up" mentality had been beaten into them for so long they couldn't even think that they might not be true. I make mistakes, too.
I've known ppl who bought land thinking they would never see light. Now, even now, are sitting pretty.
Our 401k advisor held a meeting with all us plan participants recently. Told us he likes it when the market goes down because you can buy shares cheaply. He personally is 90% invested in stocks. Put up a graph showing time length and depth of decline for all the bear markets from 1980 till june of 2008. Looked pretty encourageing actually Then gave us the big spiel on dollar cost averaging. I had given up trying to tell people about taking some money off the table. Basicly got tired of being ridiculed . When the market came back after 911 they were all sucked in to buy and hold . In October 2007 they were all crowing again about thier paper profits just as they had done before the previous crash. Thats when I figured we were close to the top . Its amazing how many retirement age employees still had huge equity exposure . Many retirements now have been put on hold. I told several of them to expect a pretty good bounce somewhere in the Dow 7000's and to use it as a way to reduce market exposure. Am sure they won't listen though.
I told my family to go 50% cash, 50% gold in january. They didnt listen so I got mad and then they did listen. Gold was at 550 euro an ounce, today it's at 650 euro's so no regrets there. Now, as the global economy deteriorates at lighting speed I try to talk about anything but the state of the economy. They have the gold now so it doesnt matter.
"Warning Family about the Economy" Perhaps it is better to start a discussion about the irrevocable change in lifestyle that is underway and the part that the economy plays. This way everyone has his/her say without feeling threatened. Other than that, just wait a couple of months from now. With retailers collapsing; the commercial mortgage market defaulting revealing a toxic stain of bad paper right through the very banking community that is still trying to recover with tax payers support and RE falling on an hourly basis, not to mention another round of the old CDS circus ... somehow I don't think that you will need to warn anyone anymore. You all know the story of two people going to sea for the first time. "Honey, we are in the middle of a huge storm" Of really darling, I was wondering why we are floating upside down" regards f9
I bought "The Creature from Jekyll Island: A Second Look at the Federal Reserve" (by Griffin) as a gift a few Christmases ago for all adult family members. Some read it, some didn't ("too gloomy"), but they had exposure to the "system." Now, even the ones who thought it was too gloomy are admitting that they can see the problems now (fiat money). Seems like "The Creature" would be a good start... just my $0.02. -gastropod
Your title "Warning Family about the Economy" turns the topic into a negative issue. You can spin the topic into a positive issue by making it a contest to save and not spend. For example, I know of a manager at a certain company that holds contests to see which person has the lowest travel expense log at the end of the month. The person who has the lowest he publicly acknowledges and gives them a shower of congrats emails. Why not turn the topic into a positive issue by making it a positive to save more and spend less? That is the real answer on how an individual can pull through this economy. Keep it simple and positive and always say it with a smile. "Warning" and being negative never solved anything.