Poking the wound

I am doing the opposite of sticking my head in the sand. I am practically hovering over my investment accounts -- sort of like picking at a scab. Before I started investing, I read a lot and came up with a basic plan for myself.

1. No matter what is going on in the market, continue to invest small amounts regularly.
2. Take a long-term approach. Buy and hold. Reinvest dividends.
3. Keep expenses down.
4. Don't be afraid to be contrarian.
5. Take advantage of credit card rewards, but pay off the balance every month.
6. Maintain an emergency fund.

My risk tolerance is fairly high, as shown by some of my recent purchases which I don't even want to talk about because you will probably judge me. I tend to gravitate towards index funds, but I also buy individual stocks because the chance of reward is higher. Lately I check the amounts in my IRA and wonder if this has been a stupid plan. But I am pretty stubborn, so I just keep contributing money and checking the value and crossing my fingers.

We want to buy a house in the next 6 months and I'm a little concerned about what all this will mean for our chances of getting a loan. Did all those optimistic people who are now defaulting on their mortgages ruin it for people like us? People who have rented and saved instead of jumping into something they couldn't afford? We don't have 20% saved yet, but we are halfway there (saved in a money market account not the stock market). That used to be okay for a first-time homebuyer. Is that still true? On the one hand I think it's a shame that people are defaulting, but on the other I'm resentful. No one wants to take responsibility for their actions. Zero down loans were handed out like candy as far as I can tell and now the homeowners think they deserve to be bailed out because they were misled. Believing what you want to believe is not being misled. Not taking time to make an informed decision is not being misled.

And now it's all falling apart.

The only thing I can do is go back to my original strategy and keep saving. Keep investing small amounts regularly. Stay focused on a long-term view. Sure, I'll lose some money, but if past trends are any indication (although past performance is not a reliable indicator of future performance) then we will climb out of this mess eventually.

Until then I'll just keep plodding along.