Surviving a financial crisis - 04/01/11 04:43 PM
Looking for tidbits of advice to dealing with emotional rollercoaster of financial crisis, not looking for validation or empathy:
Background: 53M, she is 45F. We have 9y.o.boy. Blended family. Her daughter 24, getting married this summer. My sons: 24yo- at home, finished Associates degree, might continue studies on his own. 20yo- away at college, making him take out some portion in loans as he is taking longer than we thought.
Had changed from "safe" investments in 2009 to "risky" investments in 2010. Made a lot of money on paper by November, but paper losses/real losses in Dec/Jan back to break even. End of January I foolishly invested in a well-known company that was being accused of fraud by short sellers. I had been overconfident from "confirmation bias" reading message boards and analyst reports and media articles in Forbes, etc. etc. Kept averaging down until suddenly 7 days before earnings were due, the company's auditor resigned, CFO resigned, and Chairman of BOD resigned. Auditor stated in a letter they wanted a forensic audit to confirm detailed sources of revenue/bank statements/customer payments/etc. at the 11th hour before earnings were due out - responding to pressure from the attack articles by the hedge fund shorts community. Company asked for a trading halt because news of resignations got leaked; however, NASDAQ changed it to a different kind of halt when they didn't release their earnings on time. Supposedly a compliance plan was to be submitted to NASDAQ, but that is not public information and we won't know if it was or if NASDAQ accepted such plan for weeks. The stock might or might not remain on NASDAQ, and it may or may not be involved with fraudulent overstatement of earnings, or misuse of funds, or other shenanigans.
Now investors realize there could be fraud. But it's tough to go through the 5 steps of grieving when you aren't even sure for the next few weeks or months what is going to happen. Trying to have a plan A and plan B, but emotionally I'm in Plan Z - can't reconcile a loss and move forward if I have no idea what is going to take place. Tough because I had to reveal to my significant other that basically 3/4 of our net worth may be invested in fraud. Aside from the stock holdings in my name (which were inheritance 3 years ago), we only have 401K savings of less than 1 year's combined salary at our ages (me 53 her 45). And about 100K equity in the house with a 4 percent 15 year mortgage, and about 9 years till our son starts college.
So she is from a third world country, and has been through times and grown up in times worse than any depression-era child in the USA. So that is good - she doesn't expect anything taken for granted or entitlement. But as for me - I used to think I would have to work forever, until mom passed away leaving investments (cash from her house already went to my older boys' college expenses). Then after her death I thought things would be better. Now it's back to square 1.
93 percent of my net investment worth (outside of 401K) is in a trading halt, accused of fraud, possibly could eventually be delisted from NASDAQ. Preparing for the worst but meanwhile the stock may undergo a forensic audit and the investigation and preparation of an annual report by a new auditor (which we don't even know is hired yet) could take several months. Meanwhile, it's very painful - like a rollercoaster - just keeping an eye on news developments in case trading resumes on the pink sheets, etc. etc.
I have updated my spreadsheets for surviving old age - basically at this point if I lose 75 percent to 90 percent on this investment, then the outcome is I would have to increase from 6 percent to 15 percent contributions on my 401K starting this year (age 53) until at least age 72 just to be able to survive on our social security plus 401Ks at a retirement salary roughly equal to 30 percent to 37 percent of our current earnings.
Some days are good - most days I've been tending to work longer hours (7:30pm to 8pm) to focus harder on job security, which hurts the family. Still running - only 1 or 2 days a week instead of 3 days/week, but I really have to get back to that to keep my stress levels down and my heart strong. In the past I have always been a fighter, not a person to give up. I also don't tend to revert to angry outbursts, withdrawl, or alcohol when the going gets tough. However, at age 53 this stuff is more stressful - I can feel it in my heart, my ability to sleep, my body - moreso than stressful events that occured years ago - up through my early 40s stress was easily handled by my body. At this age I'm not so sure. I also want to make sure the family that spends time together stays together. We need to bond together in this time of crisis, not move to different little shells and worlds separated, as that will cause communication disruption and misinterpretation of feelings during a financial crisis.
Advice welcome. Not really looking for how to manage finances, this is the wrong message board for that. Instead, I'm looking for how to manage the crisis emotionally and within the family relationship/communications and job/home/responsibility balance. Coping mechanism advice welcome too.
Background: 53M, she is 45F. We have 9y.o.boy. Blended family. Her daughter 24, getting married this summer. My sons: 24yo- at home, finished Associates degree, might continue studies on his own. 20yo- away at college, making him take out some portion in loans as he is taking longer than we thought.
Had changed from "safe" investments in 2009 to "risky" investments in 2010. Made a lot of money on paper by November, but paper losses/real losses in Dec/Jan back to break even. End of January I foolishly invested in a well-known company that was being accused of fraud by short sellers. I had been overconfident from "confirmation bias" reading message boards and analyst reports and media articles in Forbes, etc. etc. Kept averaging down until suddenly 7 days before earnings were due, the company's auditor resigned, CFO resigned, and Chairman of BOD resigned. Auditor stated in a letter they wanted a forensic audit to confirm detailed sources of revenue/bank statements/customer payments/etc. at the 11th hour before earnings were due out - responding to pressure from the attack articles by the hedge fund shorts community. Company asked for a trading halt because news of resignations got leaked; however, NASDAQ changed it to a different kind of halt when they didn't release their earnings on time. Supposedly a compliance plan was to be submitted to NASDAQ, but that is not public information and we won't know if it was or if NASDAQ accepted such plan for weeks. The stock might or might not remain on NASDAQ, and it may or may not be involved with fraudulent overstatement of earnings, or misuse of funds, or other shenanigans.
Now investors realize there could be fraud. But it's tough to go through the 5 steps of grieving when you aren't even sure for the next few weeks or months what is going to happen. Trying to have a plan A and plan B, but emotionally I'm in Plan Z - can't reconcile a loss and move forward if I have no idea what is going to take place. Tough because I had to reveal to my significant other that basically 3/4 of our net worth may be invested in fraud. Aside from the stock holdings in my name (which were inheritance 3 years ago), we only have 401K savings of less than 1 year's combined salary at our ages (me 53 her 45). And about 100K equity in the house with a 4 percent 15 year mortgage, and about 9 years till our son starts college.
So she is from a third world country, and has been through times and grown up in times worse than any depression-era child in the USA. So that is good - she doesn't expect anything taken for granted or entitlement. But as for me - I used to think I would have to work forever, until mom passed away leaving investments (cash from her house already went to my older boys' college expenses). Then after her death I thought things would be better. Now it's back to square 1.
93 percent of my net investment worth (outside of 401K) is in a trading halt, accused of fraud, possibly could eventually be delisted from NASDAQ. Preparing for the worst but meanwhile the stock may undergo a forensic audit and the investigation and preparation of an annual report by a new auditor (which we don't even know is hired yet) could take several months. Meanwhile, it's very painful - like a rollercoaster - just keeping an eye on news developments in case trading resumes on the pink sheets, etc. etc.
I have updated my spreadsheets for surviving old age - basically at this point if I lose 75 percent to 90 percent on this investment, then the outcome is I would have to increase from 6 percent to 15 percent contributions on my 401K starting this year (age 53) until at least age 72 just to be able to survive on our social security plus 401Ks at a retirement salary roughly equal to 30 percent to 37 percent of our current earnings.
Some days are good - most days I've been tending to work longer hours (7:30pm to 8pm) to focus harder on job security, which hurts the family. Still running - only 1 or 2 days a week instead of 3 days/week, but I really have to get back to that to keep my stress levels down and my heart strong. In the past I have always been a fighter, not a person to give up. I also don't tend to revert to angry outbursts, withdrawl, or alcohol when the going gets tough. However, at age 53 this stuff is more stressful - I can feel it in my heart, my ability to sleep, my body - moreso than stressful events that occured years ago - up through my early 40s stress was easily handled by my body. At this age I'm not so sure. I also want to make sure the family that spends time together stays together. We need to bond together in this time of crisis, not move to different little shells and worlds separated, as that will cause communication disruption and misinterpretation of feelings during a financial crisis.
Advice welcome. Not really looking for how to manage finances, this is the wrong message board for that. Instead, I'm looking for how to manage the crisis emotionally and within the family relationship/communications and job/home/responsibility balance. Coping mechanism advice welcome too.