Fragments From Floyd

We can interpret predictions like these in at least 2 ways. One is that the forecaster could be right and thus we should set up a contingency plan so as not to be surprised or financially ruined. The other and I think more common view is to discount the disastrous scenario as just another way for some obscure bank to get its name out there. After all, it is so difficult to compete among the "expert" voices of the financial industry that one must advertise a strategy that is necessarily different than, if not opposite to, the consensus forecast if it is to be heard. This is exactly like today's political strategies (e.g. Republicans said X, so we Democrats must say Y).

I think that life is full of uncertainty from a myriad of threats: sickness, violence, accidents, etc. Therefore, I think financial plans should be structured as follows:

1. Protect against catastrophic losses (e.g. life insurance that would provide for dependent surviving family members).

2. Provide for future spending through diversified investments (e.g. investments that are allocated among different risk classes among the lowest-cost managers and targeted to your goals).

The rest is life, so live it without worrying too much about what is beyond your control.