Evidently yesterday many Italians stayed home from work (in Rome), due to the predictions of a seismologist Rafaele Bendani. The best part of this was that this predication was made in 1915,  so that must make it a legitimate reason to shut down a city.

Then there is Family Radio who claims that Judgement Day will be on May 21st, and Christ will return on that day. Now the world won’t end that day (luckily), but God will destroy the earth in October, after the rapture (I assume). There is also the now famous (as portrayed in the movie 2012) Mayan Calendar story where the world will end on December 21st 2012.

Now, I have spoken about the ability of financial soothsayers to predict the future of stocks, and such, but this is taking the Weatherman theory to the extreme. The Weatherman Theory is that eventually, no matter how outlandish your predictions are you will eventually be right (or you won’t be around to see the results, so in your mind, you must have been right), if you make enough predictions.

What is gained by all of this doom and gloom? Notoriety for one thing (just ask Nostradamus, no wait he is dead), just think how famous you might be if you were the one to predict the end of the world? Come to think of it, I think I could live without that lofty title.

Financial Apocalypse?

This same kind of doom and gloom for the Financial Markets continues with various folks saying that the U.S. will be going back to the Gold Standard, or how the Stock Markets will fail and we will go back to a full barter system (i.e. the Financial Apocalypse). Will this happen? It’s all possible, that is the intricacy of life is that it is not entirely predictable and yes horrible catastrophic things can transpire with little or no warning (ask the folks in Japan about that). If you knew exactly what was going to happen every day of your life, would that be very enjoyable?

Will there be a stock market correction/crash/adjustment/implosion, in the next few years? Undoubtedly, will there be a recovery, most likely, yes. Will it rain tomorrow? Yes, somewhere it will rain on Thursday. As usual, I do not stand by those predictions about the stock market, the gold standard or whether I can get out of debt quickly, I will leave the DOOM and GLOOM predictions to various churches, the government and possibly a few weathermen.

A classic rant from 2011. Always ask why the crowd is going in a direction, before following. Following the crowd financially can be an expensive mistake.

Safety is Relative

So you think following the crowd is safe, because you are with others?

Ask a lemming if following the crowd is a good idea.Better still ask a cow in line at the slaughterhouse. Everyone else is going in this direction, it isn’t safe?

As you can tell I have been on a Risk management course. I am now full of pithy comments about risk and such. Just because everyone else is doing something, you must at least ask yourself if this is the right thing for you. This is true when it comes to your money.

Many folks who were badly singed in 2008 with stocks are looking for safer places to put their money. They think Putting Money in Bonds is Safe (or at least in Bond Mutual Funds, or Bond Indexes). Normally bonds are safe(r), but there is a perfect storm right now that makes this less safe.

Everyone in the day thought Nortel was rock solid and safe. One misguided financial media maven Garth Turner was still sending misguided investors back into the killing fields of Nortel even as the stock imploded. I remember people saying, “If Nortel goes down, Canada is going to be in a bad way“, or “The Government won’t let that happen“. It did happen, the majority of the herd were wrong again here too.

The experts are saying commodities and Gold are a safe place to hide against wars and all the calamities of today. I don’t understand these markets enough to feel safe in them, so I am staying out of them. Living in Canada I am effectively already feeling the benefits of commodities and gasoline. The Canadian economy was continuing to grow thanks to Oil and Commodities, maybe I should hedge some other ways to take this into consideration?

For a non-financial example look at the proliferation of tattoos in younger folks, is this the right decision? I have no idea, but my “not following the crowd” comment to my kids is, get into Dermatology, because in 20 years all those butterflies are going to be condors, and their owners are going to want to have them removed (oh and all those folks getting multiples piercings are going to want them filled in too).

The Herd is Right Sometimes

Most of the time, most of the people make mostly correct decisions. This does not mean there should be a blind following on your part, especially when your money is involved. You must ask questions about why your money should be where it is. Why it should go where folks think it should go, and don’t follow simply because everyone else is doing it.

Remember what your mother used to say, “If everyone jumped off the bridge would you follow them?”, kind of like what I did with Nortel.

Given the tragic events that have happened following the Earthquake in Japan last week, many folks have been pinned to their TV’s trying to figure out whether the Nuclear Reactors will become another Chernobyl, or simply another Three Mile Island? We are all mesmerized by the horrific and scary news that is coming from this scene of devastation, and we all hope that the people of Japan can recover from this Natural Disaster (and we send our hopes and prayers).

Have you noticed no one is talking much about the Middle East, much? Yes, eventually the news gets to this, but long after you have changed the channel, or it is on page 2 or 3 of the front page, because it is old news. Is this justified? No, the events going on in Libya, Bahrain and other places are no less newsworthy, but due to the terrible events in Japan, they are no longer that important, to the News Media (and to us as consumers of the media stream). Are the folks in the Middle East taking advantage of this Global Distraction? Some might argue that they are, it will be for history to show whether they did or not.

What does this have to do with Personal Finances you may ask (if you have read here enough you know I’ll get there some time)?

This kind of distraction happens in our day to day lives all the time.

Why is the House so Damn Cold?

A classic example was a few years ago, my wife and I were discussing buying a new Television and finishing our basement, then one morning we woke up and the house was 58 degrees Farenheit and cooling off quickly, the furnace had finally packed it in.  All our plans for other frivolous things suddenly went out the window, because we had to deal directly with an important issue at hand, replacing our failing furnace.

Paying for the replacement furnace caused a great deal of distraction financially, and we had to figure out where the money came from and what was going to move down in the financial priority queue (given heating the home with small children is easily the highest priority).

How might this distraction have been dealt with differently? Plenty of ways:

• More diligent service of the furnace itself, although we did have it checked a year previously
• Have an Emergency Fund available so that plans do not get re-vectored when disaster strikes
• Have a replacement plan for major appliances, with an estimated shelf life for each. If you assume each major appliance should last about 10 years, and plan on replacing them when they die, you can set up savings systems to have the  money ready.

Don’t allow events to distract your financial plan, or your financial day-to-day life. Make sure you have complete concentration on your goals.