where did all the money go?

Ross Dawson writes about "Wealth Adaption Syndrome" - i.e. you were a master of the universe 18 months ago and now you are down to your last million. Or simply that the value of your house (or your super/pension) is worth less. You are feeling poorer.

How do you deal with a sudden reduction in your financial worth and consequent reduction in status? Well, one tried and tested strategy is denial. The stories of former managers who couldn't tell their families about their sacking and would get dressed for work everyday, leave the house and then hide in the park with their packed lunch and sense of overwhelming guilt. Some people will not be able to accept the new reality - opportunities in debt collection and financial counseling here. The escapism and fantasy that Ross mentions are subtle forms of denial.

Another response is to redouble your efforts. Find a new investment vehicle (preferably one not linked to Bernie Madoff), fashion a new career, go back to uni, etc. You had a taste of it once and you're not going to give it up.

A third response is one that attempts to look beyond money & purchasing power as your core defining characteristic. Kim talks about a boom in craft sales, the rise of the "slow" movement (including slow community may be), a burgeoning interest in meditation, yoga, Buddhism and probably the wackier end of spirituality. I have mixed feelings about this. On the one hand, "self-mastery" is worth pursuing; on the other, it may be a charlatan's field day.

The choices people make are to an extent dependent on their circumstances. If you have a lot of commitments (mortgages, children) and comparatively few assets then your focus is going to be paying the bills. Where as empty-nesters and 20-somethings may choose different paths.

N.B. An important point to note about status in general and wealth in particular is that it's relative. If you lose a pile of money when everyone else is doing great, that sucks. If everyone else loses a pile of money then it still sucks but it sucks less. Products that offer improved relative status at comparatively lower cost should do well (e.g. hiring rather than buying luxury goods, groups that require selective membership rather than high admission prices).