April 4, 2011

Invest, and live without fear.

Lately there has been a great deal discussion about the economy, the financial well-being of our democracy, equity markets; concerns about how to invest for the future and yes even the collapse of our financial system. It seems to me that all the guru’s, experts, pundits and doomsday theorists are in full swing these days and they have lots of groupies and avid followers. If only I had the time to illustrate their predictions and show their folly. Let me remind all of us the words of Solomon; “Since no man knows the future, who can tell him what is to come.” Eccl. 8:17

After twenty years of being in the financial services industry, I am not sure that I can remember a time when there has been more hype, media coverage, as well as the sensationalization of financial chaos as was witnessed in 2008, and recently with the possible nuclear meltdown in Japan. But here is what we do know, the world hasn’t ended, the markets haven’t collapsed, banks are healthier than in 2008, there is no more frivolous lending, corporate profits are at all time high, consumers have been paying down debt, GDP is growing again, it seems to me that the free market system punished and rewarded all the misbehavior in 2008 that was previously taking place. In a sense the system corrected and cleansed itself. The life of a Christian parallels in many ways. Ultimately, the free market system and capitalism once again prevailed and will continue to prevail as long as we have a free and innovative society. Why? Because individuals will continue to pursue their own self-interest. For the most part people are prudent. In order to destroy trade and profits, one must destroy the human spirit and mankind. Many societies attempt to do just that by creating a social system and means for distributing goods and services. (By the way, many of those societies have now turned to capitalism.)

Even if our system did in fact collapse or the dollar devalued, a new system would replace it. Would you not care for your family or yourself in the very same way the very next day by dealing with your circumstances, trusting God, and providing for your family in albeit a new system. Let’s not forget that Japan in the mid-40’s suffered two actual nuclear explosions, a destroyed political system, a broken and transitional economy and today is the third largest economy in the world. Sure, there will be a time of adjustment and chaos. No one is saying there are not difficulties and numerous challenges ahead.

I am not here to give financial or investment advice, but I do believe in a system that diversifies across different asset classes and attempts to capture the risk and reward characteristics of a free market capitalistic system that continues to propel forward despite government intervention and the occasional financial or natural crisis. All the hoopla about buy this, sell that, put it all in gold, sell the market, short the dollar, buy this currency, put in a shoe box, get out of the market; at the end of the day, we must still put our money somewhere. Consider the parable of the talents in Matthew 25. Only the fool buried his money, didn’t get a return and was admonished by his master while the others profited handsomely.

A portfolio that’s diversified amongst different asset classes, i.e. a mix of equities and bonds, allows one the ability to cushion against the hard times while participating in the free market system. Rebalancing once a year provides the ability of purchasing the asset classes that have fallen in value with the ones that have risen in value. Baring issues of Eschatology, we shouldn’t worry about the future, we should do the very best with the resources provided, believing in our free market system and obviously trusting in the Lord with our daily bread!

“Therefore do not worry about tomorrow, for tomorrow will worry about itself. Each day has enough trouble of its own.” Matt. 6:34

– Article contributed by Mario Yngerto, CFP®. Master’s Men team member.

You can reach Mario for comment at myngerto@genesiswealth.org