Comments on: The Personal Finance of Fear – And Why I Reject It

By: rstlne

rstlne — Mon, 19 Nov 2007 17:14:13 +0000

I read “The Coming Economic Collapse” and I agree that it is not a book about personal finance. It is a book about an investment theme. The book’s message is rather extreme though. Here’s the way I like to think about energy and precious metals as investments: There are times when these investments are appropriate and there are times when these investments are not appropriate. It’s up to you to take the time to study them as well as prevailing economic conditions to decide when and how much to own of them.

By: Tordr

Tordr — Sat, 17 Nov 2007 14:55:28 +0000

Trent

On the one hand, I agree that this blog is not the forum for reviewing such books. On the other hand I do find it wrong to dismiss such books automatically. Below all the fear and hyping of gold there might be some thoughts about how to live more self sufficiently, and that is a very fugal thing to do.

By: Stephan F-

Stephan F- — Sat, 17 Nov 2007 06:12:44 +0000

Gold is actually a really good investment for really hard times but not in the form most of those gurus hawk. Gold coins and bars are fine if you like the pretty, but are completely useless in times of general economic upheaval.

Gold rings, and necklaces are the best. They can be traded easily for many things. Everyone is familiar with how much they cost and are useful in themselves as jewelry.

How do I know? My parents and grandparents lived in Germany during the Wars and Depressions. Gold jewelry was a common form of alternative money.

The recent unpleasantness in Argentina also had a thriving trade in gold jewelry.

Also go to any pawn shop and you’ll see plenty of it too.

By: Margaret

Margaret — Sat, 17 Nov 2007 05:59:02 +0000

The problem with oil is not that we are running out, but that deposits are more inaccessible and there is significant cost (monetary and environmental) to getting that oil out. If society is going to go off the rails, I’d take bets that it happens because of an environmental crisis long before an oil crisis.

By: Michael

Michael — Sat, 17 Nov 2007 05:02:56 +0000

I think most fearmongers are kidding themselves if their nightmare scenarios come true. Nuclear war hits! Multiple cities, totally destroyed! Society in chaos! Well…sure, these guys have food and water and fuel and equipment stocked up. But will society begin again before the food, water, and fuel run out and before the equipment wears out?

Gold will be like anything else in a total state of emergency or depression. People will pay for it only what they want to pay for it. Your $800 gold coins aren’t going to last long if all you can get is a tank of gas and a few sacks of food for it! And unlike other investments that earn interest, once you sell the gold, it is gone. You will not get it back unless you negotiate a costly exchange for it.

Foreign currencies? Ha! Countries and individuals around the world are pumping more and more money into euros and pounds, abandoning the dollar. Where will the money go if the euro and pound are deemed overvalued?

By: RNA

RNA — Sat, 17 Nov 2007 03:29:32 +0000

You’ve pitched some sociology books into your “personal finance” classification (”Nickel and Dimed”, “Born to Buy”, “The Overspent American”, “What Color Is Your Parachute”, etc.) so it doesn’t make much sense to exclude these, especially when some of these books, like the ones by Jim Rogers, sell very well and are obviously being used as pf books by readers. I wonder if you are new enough to investing that commenting on commodity allocation isn’t in your comfort zone.

By: Minimum Wage

Minimum Wage — Fri, 16 Nov 2007 23:10:32 +0000

“There is no “magic bullet” solution for any future crisis.”

Right below that was an ad for Viagra. Isn’t that like a magic bullet solution for a future crisis?

By: Mrs. Micah

Mrs. Micah — Fri, 16 Nov 2007 21:54:09 +0000

“The best thing you can do to prepare yourself for financial strength in any situation is to work on constantly improving yourself. Learn as much as you can about everything. Focus on teaching yourself new skills. Get exercise. Learn how to live as frugally as you can so that you’re not helpless in the event of a financial crisis.”

Exactly. Now, if oil hits $200 a barrel or $2000 a barrel, we’ll use those skills to figure out how to deal with it. And if it hits $20 a barrel, we’ll still use those skills and live responsibly. :)

By: Heidi

Heidi — Fri, 16 Nov 2007 21:05:30 +0000

Well said! I have no time for scare tactics.

I am a regular reader and you can count this post as one of your ten “truly great posts” for November.

By: dong

dong — Fri, 16 Nov 2007 20:53:44 +0000

I agree I don’t think the fear mongering about quickly draining resources is necessarily a topic for personal finance, but I think the messages are important ones to hear by the masses, and I’m not even a peak oil guy. It’s important that we know our resources are being drained so that can move onto others. To bury our heads in the sand does nothing for us when we actually do run out of oil.

By: Heather

Heather — Fri, 16 Nov 2007 20:51:57 +0000

“The best thing you can do to prepare yourself for financial strength in any situation is to work on constantly improving yourself.”

Hi Trent! I’ve been reading and enjoying The Simple Dollar for a month or so now and this is my first comment. I have never agreed with anything more than this quote above. It’s so important to remember that, no matter what the situation, the most important thing you can do is focus on improving yourself. The goal of concentrating on personal finance, for me, is so that I can be more prepared to handle any situation that life throws my way, and that’s true for many areas beyond finances. Learning to handle your finances is just one part of becoming a well-rounded, responsible, life-loving human, and acting out of fear of events beyond your control is completely counterproductive to that process.

Thanks for the wise words and the great blog!

By: Trent

Trent — Fri, 16 Nov 2007 20:10:37 +0000

“I don’t believe that the depletion of oil and other resources are just fear-based rantings.” You’re right, oil is a limited resource. However, wind, solar, tidal, hydroelectric, gravity, and nuclear energy are not (for our purposes). We just need to wait until the market makes it financially worthwhile for investors to move to those technologies, and we’re not there yet. To preach apocalypse about it is nothing more than fear mongering.

By: Trent

Trent — Fri, 16 Nov 2007 20:03:10 +0000

I’ve read several of them. I just haven’t reviewed them. I write reviews of roughly 2/3rds of the PF books that I read – I tend to skip the highly obscure ones and the ones with deeply negative messages.

By: Never the Same River Twice

Never the Same River Twice — Fri, 16 Nov 2007 19:57:20 +0000

Good food for thought here, Trent. We all know that prices will rise, nations will fall, and we’re all gonna’ die someday. As much as we might try to predict when those things are going to happen ultimately we have insufficient data to do that accurately. Buying into fear mongering is only going to make the mongerers richer and you poorer.

By: Laura

Laura — Fri, 16 Nov 2007 19:45:42 +0000

Great point:

By selling fear, you’re immobolizing people from making choices that can help them. They’re not doing a service to their audience.

By: katana

katana — Fri, 16 Nov 2007 19:36:51 +0000

Thanks for the post, it’s very true. We don’t know what’s going to happen, and there’s no point preparing for imaginary horrors. And would anyone want gold if everyone is short on food and water? Maybe, while we’re planning for the worst- being attacked by zombies? ?

By: Adam

Adam — Fri, 16 Nov 2007 19:32:18 +0000

Trent,

I think you are right on two accounts:

1. The books. Those “fear” books sicken me. The first irrational decision people make is to spend $20-$30 on these things, when they could save up that money…for the meltdown!

2. Gold. I think it is a decent investment when it is in a person’s portfolio sparingly. You are totally right in how people use it: “the end is coming.” Dave Ramsey often says that, when an economy collapses, people don’t survive because they have gold; they survive because they have a skill or something to barter. Also, the best way to “play” gold (in my mind) is in stocks, and, again VERY sparingly.

Great post!

By: freddiemac

freddiemac — Fri, 16 Nov 2007 19:27:22 +0000

I read your blog every day and appreciate the good information that you write about. However, I also read theoildrum.com every day as well. I like to read from a variety of resources.

There is good information available about the depletion of resources that, like it or not, will affect us. For instance, it is notable that the increase in the price of gasoline during the fall is not a normal occurrence, yet it is happening this year. In fact, it has happened one year after the maximum production of all liquids in July 2006.

I don’t believe that this is right place to address these concerns. TheSimpleDollar.com has a different purpose. However, I don’t believe that the depletion of oil and other resources are just fear-based rantings.

Just a thought…

By: Joe

Joe — Fri, 16 Nov 2007 19:26:44 +0000

If you haven’t reviewed these books, how do you know about their common denominators?

By: Ron

Ron — Fri, 16 Nov 2007 19:24:30 +0000

Trent, you’re “right on the money.”

IMO, the only thing worse than selling fear is selling come crazy conspiracy theory.