I just returned from a 2-1/2 week cruise vacation from California to Hawaii. While I would like to say it’s good to be back, the truth is I wish I were still on the ship. I am a veteran of cruising as this was my ninth such vacation but this was different in that I had never sailed for this long. This was also a depature from my early cruises in that the technology age has definitely changed the face of cruising, you now have satellite TV so that you don’t miss a football game (yeah) or the latest news from CNN (boo). It was also very different in that the ship’s passengers are a decidedly older crowd because the average younger working family with children cannot afford to spend the money or take the time to enjoy a cruise of this length. It also provided me with a different perspective of the latest economic happenings from the point of view of mostly retired and financially comfortable cruise mates.
Cruises used to mean assigned seating with set times dinner and the same dining partners for the duration of the trip. If you were at a good table that was great. However, if you had a table full of people that you didn’t like you could find yourself wishing that the vacation would end quickly. Recently many cruise lines have instituted an open seating option at dinner, which meant that you could eat when you wished and dined with different people every night. This was the option that my wife and I chose and it enabled us to meet a lot of new and, in most cases, very interesting people.
The conversation would always start with introductions followed closely by two questions: 1) where were you from and 2) what do/did you do for a living. When my turn came and I stated that I had been a financial planner for fifteen years and was now a real estate investor and author, the conversation always turned to the current financial conditions and the state of the housing market. It was great for me because I was able to hear what other people were thinking about the economy and how it impacted them.
Our Dinner Partners
One night we met a middle-aged couple from Dubuque, Iowa. They had been real estate investors and had previously owned a couple of rental properties. However they found that they were not cut out to be landlords and decided to sell their properties. They were fortunate in that they had not lost money and, in fact, had made a very modest profit. They decided that they were more suited to be stock market investors and put the bulk of their investments, including 401(k) accounts, into mutual funds. They had managed to time the switch to coincide with the market peak last year and were now wondering what to do next. The daily financial news centered around the how much the Dow had fallen that day. Although the seas were calm, they looked fairly seasick as we discussed this.
On another night we had dinner with a retired couple from Arizona. Conversation this night turned to their concern for the daughter, the Ph.D., who was in the process of divorcing her husband, the doctor. It seemed that the well-educated couple had been caught up in the real estate craze. In a very short period of time they had managed to accumulate a portfolio of over 30 rental properties. The combined properties had a very negative cash flow and had declined significantly in value. This, supposedly brilliant, couple had bought into the guru craze of becoming fabulously wealthy through real estate and were instead facing financial ruin and, ultimately, divorce. It was a sober illustration of the human toll of the housing mania.
One of the most interesting nights was when we had dinner with Don and his wife, a retired auto dealer who had owned a Ford dealership in Indiana. His sons had since taken over the business. He reminisced about how owning a car dealership was, at one time, almost a sure path to wealth. It certainly had been for him, but now his sons were struggling to stay afloat in these economic times. Earlier this day the heads of the Big Three automakers had been pleading their case for a bailout to the members of congress. I was sure that Don would be in favor of the bailout and I was truly stunned when he said that the Government shouldn’t give them a penny. I asked him why and he said that if congress bailed them out they would never change. He felt that the companies should be forced to deal with the mess that they created even if it meant that the Big Three had to merge or be allowed to fail. Wasn’t he concerned for his sons? Of course he was and there was a good chance that they would fail as well. He could feel this way because he was wealthy enough to take care of them and he would be their “backstop” (his words) if he had to be.
While passengers on a cruise ship do not represent a real cross-section of America, it was a great opportunity to hear what others had to say.
In three words I can sum up everything I’ve learned about life: it goes on. –Robert Frost