Fore-warned, fore-armed, and a four poster bed

(Originally Posted October 9, 2011)

I talked with another person recently who thanked me for NOT agreeing with them when I did their reading -- although, at the time, it didn't tax my "psychic powers" too much to know she was not particularly pleased with what I had to tell her. You may think this is an "odd" thing to say -- but it kind of works like this. In this particular case, a woman was having an "affair" with a younger man and a passionate one, it was.

She, as many of us have done in that first sudden bloom of desire, felt that this was her "soul mate" and even though she had a very comfortable marriage to a wealthy and seemingly devoted husband, she was thinking of leaving her marriage so she could be with this other man. Of course, what she wanted to hear was this: YES, you are soul mates, yes all will be well, yes if you leave your husband everything will be smooth sailing and a steamy romance novel future is there for you into eternity.

But that's not what I said.

Rather than give a yes/no answer -- which I am loath to do as it does not address "root cause" and so the likelihood of needing to ask a similar question 6 months down the road is high -- I like to look at the "story behind the story" and, in this particular instance, that story was, in fact, the "other man": who is he, what is he "like", what are his motivations, where do those motivations "come from" . . . what is he likely to do "in the future".

Without gving details, and to make a long story not so long, my analysis of this man's personality -- and the trend line one might expect if that personality assesment were correct -- turned out, four months later, to have been dead on. He did almost exactly what I said he would do and, for those of you who may have been disappointed in love, it was not a particular "surprise" that where in months past she had passionately sung this man's praises, now she was EQUALLY passionate in telling me all of his faults.

This from a woman who, over a period of time, has grown to "trust" my instincts and even though she debated me a bit at the time :) . . . I am sure, now, that she was glad to have waited a bit (as I suggested she do) before leaving her marriage.

Why do I bring this up?

Because I want to talk about economics and my "predictions" from 5 years ago when I said the housing market would "crash" and unemployment would kick in at almost unimaginable levels and persist for an extended period of time.

When I said this, people were "in love" with the idea of constantly getting richer and richer, buying bigger and bigger homes, buying more more more. To come along and say "ugh, 'scuse me -- I don't mean to rain on this lovely parade but . . . "

It was not well received.

But, I want to talk about what paying attention to my "story behind the story" would have meant -- because it addresses an even bigger issue in my world -- is saying something "contrary" to what someone wants to hear being negative -- or is it an attempt to be protective?

In 2006, several of my friends asked my "advice" about buying and selling homes. I suggested, in every case but one (and I will explain why the one was different in a second), that they sell their homes by June, 2007 at the latest and then RENT a home for a year or two, put the money in a 1 or 2 year money-market account, and buy a home sometime late 2008 or early 2009 (so as to avoid any capital gains on their existing homes -- they had two years to buy without negative tax implications and all of them were set to make a "killing" in the short-term) because I said that houses would likely be substantially cheaper by that time.

No one followed this advice and in a couple of cases, even though they had 6 figure cash "wins" in selling their homes, the individuals lost their new homes and became bancrupt. In all these cases, had they taken the path I suggested, they would have bought a comparable home for, in some cases, half of the purchase price in 2007 and saved, in some cases, well over a quarter of a million dollars.

The person I suggested just sell then and buy right away was buying a home in Kansas for, I think, $58,000 with some credit wrinkles in their past so in this case it was to her advantage to seal the deal right then. Housing prices in rural Kansas had never spiked so they were unlikely to crash. Everyone else I spoke with lived in big cities in very desirable housing markets: California, Washington, DC, and Atlanta and each of those markets reflected the boom-bust cycle in very dramatic ways.

But, of course, it wasn't what they wanted to hear. RENT? Don't be ridiculous!! Which is fine; one makes decisions based on a multitude of variables and takes a chance in every case. But, again, what was considered by some as being "negative" was, in fact, just one way of looking at current events mapped against a possible future scenario. No one is right all the time -- but this "prediction" was given in the spirit of trying to be helpful and not a "wet noodle".

Same holds true with pensions. I warned people close to me that all was not right in the Municipal Fund kingdom and I suggested that they take the option of converting any 401K's, IRA's, or company pensions and taking the safest, lowest risk positions they could as I felt the stock market was due for a bit of volatility. Some actually did this (and were glad they did) but again most did not.

The moral of this story: if you are going to consult a psychic or astrologer or numerologist, witch doctor, tea leaf reader or Uncle Bob's ouija board try to do so with an open mind. Not hearing exactly what you want to hear may actually be the "truth".