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Beware of Holiday Party Chatter

I would be willing to bet that you have been to this kind of Minnesota holiday party before. There is a good chance more than once.

It could have been your work holiday party. Or the work holiday party of your significant other.  Maybe it was your neighborhood holiday party.  In the old days, this event was called an open house.

Holiday party conversations follow three main patterns.  Your first conversation is about the weather.  Everyone in Minnesota is depressed about how cold it has been. We all know that taking about it does not make us any warmer.

Second, you exchange pleasantries about your families. You share your kid’s story; then you listen to one. The accomplishments of your children are always more important when you tell them to someone else.

Last, you talk about work and business. This holiday party season, it will be hard not to talk about how well the stock market has done in 2013.

Your friends and co-workers will talk about how much money they have made in the stock market this year.  Their individual company 401(k) retirement plan account balances are at all-time highs. They talk as if their investment knowledge is the sole reason for the investment success.

In 2013, everything in the stock market has gone up. My daughter told me about a discussion last week that took place in her high school business class. The result was that her classmates can’t wait to get their first jobs so they can all invest in the stock market.

The same can be said for home prices.  The Minnesota real estate market has improved.  Just like our parents, it is our birthright to make huge profits when we sell our homes.  Even if your home would never sell for what you think it is worth.

I sense some eerie similarities between this year’s holiday party conversations and those that took place at year end 1999.  Do you remember what those conversations were about?  Let me remind you; stock market gains and record home prices.

Both the stock market and home prices have gone through historic declines since 2000.

Everyone this holiday party season feels richer.  No one talks about risk. Every investment that everyone owns is going to keep rising in value forever.  

At this year’s holiday parties, have a great time and enjoy yourself.  Tell everyone how cold you are and ask about their kids.

In the back of your mind, start thinking about managing your investment risk. As you politely listen, start thinking ahead to 2014. Thoughts of how to best keep the majority of your 2013 investment gains should be dancing in your head.   

Ric Lager
Lager & Company, Inc.

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

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