How to Protect Yourself if Your House Value Drops, or Your Income is Lost - Part 1

Roy MacNaughton

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If you haven’t heard of Yale economist, Robert Shiller, hold on to your hat, because you will…and soon. He is the author of the runaway bestseller, Irrational Exuberance, which showed how breakthroughs in technology always seem to result in bubbles in the stock market. Then unfortunately, these bubbles are usually followed by catastrophes. How many people do you know who lost part or all of their job or retirement nest egg in the dot bomb market of the late nineties? Shiller has recently written another book, The New Financial Order. This is a scary one, since it follows the path of “globalization" and how it is threatening the livelihoods and assets of the ordinary person on the street.

Let me explain: the two biggest assets most folks have these days, are their homes and their incomes derived from working. These are even now under siege. How do you protect yourself? If you lose your job, or your clients lose theirs, and they can’t pay you anymore to consult to them, how do you make that tuition, insurance and mortgage payments? And what if the value of your most valuable asset - your residence - starts to go south? How will you feel, paying mortgage payments on a house that is worth a lot less than you are paying for it… for thirty years? Imagine what life was like before home fire insurance. We didn’t always have it, you know. If your house burned down, that was IT.

Professor Shiller’s plan is to invent, develop and then deliver financial “hedging" products that will protect you against the loss of your employment income, or a drop in the value of your home, to name the two most prominent products he is developing at present. Think, just for a moment, how that would affect your mental state. If the huge fear of either of these two horrors happening is lifted from your shoulders, would you be a happier camper? Would you be able to concentrate more on your life, and doing a great job at work, without constant fear? Would you be physically and mentally healthier? Would you be able to get along with the boss better? The answer to those questions is: you bet you would!This is an idea whose time has come. If the price can be kept sensible, the financial institutions will have a wonderful new set of products to sell the general public. Most people still working for a living will be happier and more productive. Shiller is quoted as saying: “we should be able to find a market for everything, and we are only at the beginning of risk management in the world. What’s changed is the information technology, which has allowed these products to be created. For instance, online auctioning is providing a market for people to take millions of risks each day. We want to provide a hedge that will change the world. "

Imagine for a few moments that this gigantic overriding financial and retirement fear has been removed or at least greatly reduced. You are now doing a much better job for your employer or doing your own thing. How much easier would it now be to sell real estate? Would housing starts jump upwards? Would the economy improve? Can you see how this innovative way of thinking might cause the current paradigm to shift to the positive? Watch for and learn more. . .in Part 2.

©Copyright, Roy W. MacNaughton, 2006

Roy MacNaughton is a niche marketing coach and business writer. He’s a seasoned marketer, with more than 30 years of international marketing experience, including nine years online. His new e-book, (Marketing Yours), teaches solo practitioners, entrepreneurs and professionals how to market their most important product. Learn more at his blog:


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