Stock Market Finishes with Worst August Since 2001

I must confess to a moment of weakness yesterday. Given everything going on in the businesses our lives lately, I briefly (for about three hours) wanted to sell everything and park it in fixed income investments like municipal bonds and real estate to just collect cash each month without being involved in any way, shape or form. I went to sleep and woke up in my right mind. Time to buy again.

The stock market crash this month was the worst August since 2001.  At times, it was, to paraphrase Buffett, “like a bird flying into the middle of a badminton match.” The long-term investment accounts were unscathed (there, in fact, we love falling prices) but the speculation accounts took a beating.  For now, it’s all on paper due to most of the maturities in our derivatives coming up in January.

I joked with my dad yesterday that if I were to sell all of the businesses and take a very large check, I think just to catch a breather I would park every penny in tax-free municipal bonds for a year to form strategy and rest; maybe run off to Bora Bora or something.  On paper, a banker would think I was a 95-year-old retired tycoon living off his money.  I even thought about buying Series I savings bonds just for good measure!

His response?  “I’ll be parked right next to you in the adjacent space.”

At the rate we are going, by the time this recession is over, we are going to be sitting on a veritable fortress with little or no debt, tons of excess short-term liquidity, and ownership of a range of assets that makes us money year-round.  We keep reducing our (relatively small) liabilities through regular amortization and extra payments and investing in expansion so it will be interesting … when the storm passes, we will be like a bird that has been hunkered down in the side of a cliff only to emerge and realize he is the only one left standing and now owns the entire mountain.

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