Picked up an interesting read at the library The Pessimist’s Guide to History by Doris Flexner and Stuart Berg Flexner published by Collins, NY, 2008. The Guide starts at the Big Bang and goes through events to 2007 which affected many people. Whether it is war, famine, air crashes, earthquakes, floods, mechanical and financial disasters. There is more than 1,000 entries and only 6 financial disasters. If you are in the financial world, things happen but not often to the financial world; because there is protection or insurance. The titles prior to 2007 are the South Sea Bubble, Stock Market Crash in 1929, Barings Bank Collapses (losses on the derivatives market), Financial Turmoil in Indonesia (the end of the Suharto regime); bankruptcy of Enron and WorldCom. No doubt over the years, individuals could pick different companies which people lost money. The point is most of the time, it is events other than financial. If an earthquake happens and they still happen, it is going to be hard going for those involved and given a global economy somehow, somewhere a firm or people of your country are going to be affected. However it is possible to diversify your holdings and if desired you can assist them through other investments.

It is easy to see how catastrophes and massacres and mayhem occur, the harder aspect is risk management to ensure your ability to generate income is not too affected and how do you react when you see things happen in the world. This is when you typically have a bias towards events near you or where you have been over the years; biases are good and can be used in stable secure income generating investments.

Linking to dividend paying stocks, we know climate change is happening just as floods and fires will happen. We do not know when they happen and need to use risk management to try to ensure profits are continual. There is always a great amount of change in the world, it does not mean your income has to be affected by it. Ideally we have multi lateral agencies that look after most of the clean up; as individuals you should know about the past and try to figure out what will continue to happen to make money from it.

There are more questions than answers, till the next time – to raising questions.