3 Calming Thoughts as we Approach Default

Last Updated Jul 27, 2011 10:22 PM EDT

I admit that I'm feeling a mixture of queasiness and impatience as the clock ticks toward the August 2 default and Congress continues its partisan political posturing. Yet there are three things I keep in mind when it comes to my portfolio that remain unchanged.
  1. I am not investing in the stock market. I'm actually investing in global businesses that create products for consumers, and betting that the stubbornness of our politicians are no match for the strength of global capitalism.
  2. I am not going to be toting a pouch of gold to the supermarket next year to buy groceries like some character in a Dickens novel. The very thought of our economy turning back to the days when gold and bartering were mediums of exchange is downright silly.
  3. I am quite sure our politicians will act when theoretical consequences become a reality. To term the current bickering of Congress as childish is fair. As with children, there's nothing like being faced with corrective consequences for bad behavior to get that behavior to change. If our economy and the stock market begin a downward spiral, I suspect our politicians will get the message very quickly.
Though our politicians certainly have the power to create short-term disruptions to our economy and the stock market, if they try to mess with capitalism too much, they will lose their jobs. That thought is particularly calming in what is now a very unnerving time.

My portfolio may be a tad different than my fellow CBS MoneyWatch writer Jill Schlesinger's Doomsday Portfolio, but neither of us are doing much. And if the stock market does tank, I'll be greedy when others are fearful, as the legendary Warren Buffett put it best.

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    Allan S. Roth is the founder of Wealth Logic, an hourly based financial planning and investment advisory firm that advises clients with portfolios ranging from $10,000 to over $50 million. The author of How a Second Grader Beats Wall Street, Roth teaches investments and behavioral finance at the University of Denver and is a frequent speaker. He is required by law to note that his columns are not meant as specific investment advice, since any advice of that sort would need to take into account such things as each reader's willingness and need to take risk. His columns will specifically avoid the foolishness of predicting the next hot stock or what the stock market will do next month.