Is the American Dream Dead? I hope so!

If you had asked any random American in the spring of 2008 how they defined the “American Dream,” you would probably hear something to the effect of owning a house with a white picket fence, a few children running around the yard with a dog, and a BMW for him and a Honda Odyssey for her parked in the driveway. Fast forward a few years to the summer of 2011 and that same person may have a slightly different answer. It’s not that people don’t want the same types of things as they did prior to the recent downturn in the economy, it’s just that the thick veil of unreality that had clouded the eyes of millions of Americans for years suddenly became a little bit thinner.

For tens of thousands, the American Dream was achieved not by years of conservative spending habits and prudent investing, but rather a no-limits bared consumption lifestyle fueled by easy credit and people’s unwillingness to use the word “no” to stuff. “Should I buy a 3rd pair of shoes this month even though I have 5 like them at home?” Yes! “Should I buy a new Ford F-250 truck even though I’m not a contractor and I commute 35-minutes to downtown each day?” Sure! “Should I take out a HELOC to fund that $50,000 gourmet kitchen I’ve always dreamed of despite the fact that 99% of my cooking involves the microwave?” Of course I should! “Should I buy this home that’s 3 times larger than I need, with no money down and an adjustable mortgage due to adjust in 36 months?” Absolutely!

These examples may be comical to a degree but a quick step back a few years and that was reality for many people. “Let the good times roll” was the prevailing attitude for the masses and the result was the inevitable crash we all had the privilege to walk through. As our glass-house perceptions of reality came crashing down all around us, we adamantly cried “never again, I’ll do it differently next time.” Fiscal responsibility chatter started flooding in from the white houses of Main Street to the slightly larger White House on 1600 Pennsylvania Avenue. At last, everyone seemed to be reading the Tortoise and the Hare again and desiring to morph their lives to resemble that of the Tortoise.

Though the mess isn’t over for everyone yet, there are enough positive changes from the job and stock markets alike to see that a recovery is in progress. Life is returning to what many people would call normality;  in doing so, I wonder if all those people who begged to become the Tortoise, if given the 2nd chance, are doing so? I’m curious what lessons have really been learned during the down times? Have behaviors really changed? Do we really intend to be more watchful of our spending habits? Have our investment strategies sincerely become more conservative? Have the methods for obtaining the American Dream, at least the pre-recession versions, really died? I hope so for all of our sake. Otherwise, we’ll be right back in this position within a decade if not sooner.

Buy, Buy, Buy!

During the past few months we’ve witnessed quite a stir in the financial markets. Company’s flounderingin debt are beginning (or already have) to sink. Company’s with substantial cash positions buying up under-performing ones at bargain prices. The stock market bouncing up and down like a dingy in a hurricane. Which ever way to look at the financial marketplace, times are certainly uncertain. That’s why today is a great day to invest.

True investing is placing your money somewhere that isn’t going to be touched for at least five years. This will allow it to grow through seasons of ups and downs. When we find ourselves in a season such as this, where everything seems to be hitting 52-week lows or underperforming, we should be looking for every spare peny we can muster and get it invested. It’s kind of like shopping the day after Christmas. There’s this huge balloon of shopping that goes on for about 6-weeks and then all of sudden, it pops. It’s over. The shopping rush is over and every store wants to clear out their remaining inventory. Prices are slashed 70% to 80% off the retail price and deals are sitting on every shelf. If you’re smart (and don’t mind waiting to open presents for an extra day), you’d hold onto all your cash until December 26th and then buy, buy, buy!

That’s the kind of market we are in. For those with cash it’s time to buy, buy, buy! There are great deals everywhere just waiting to be had. It’s a rare time in history (only 4 or 5 times in the last century) that the market has offered so many good funds and company’s at such attractive prices. Don’t get stuck looking backward in a few years when prices have rebounded only to say “I wish I would’ve invested more”, because by then it will be too late to capitalize on the deals that are currently abounding.