No. of Recommendations: 2

It amazes me how differently you and I interpret the same events.

It is futile to complain about bear markets. They have happened before. They will happen again. They are as night to day, winter to summer. They are merely one part of the economic cycle. During that part of the cycle, an investor has three choices: ignore the bear (asset allocation), run from the bear (go to cash), or ride the bear (go short). But bear markets cannot be abolished by wishing or wanting, nor are they a bad thing. They have to happen. They cull the herd, making possible survival of the species (in this case, "the Economy"), as opposed to particular individuals (who, collectively, make up that economy.) That $8 trillion dollars of wealth Greespan disingenuously laments didn't just disappear. It was redistributed from weaker hands into stronger ones.

Whether they were the best hands is a social engineering/ moral philosophy question about which we aren't likely to agree on, either, but I'd argue that the bubble didn't have to happen to the extent that it did, and that Greenspan is to blame for failing to squelch it, as the record shows he could have as early as 1996. In facilitating (temporarily) the wealth of many, he really facilitated (long term) the wealth of few, which is a despicable social objective, but, as the saying goes: "Them that has the gold makes rules." The so-called "middle classes", in wanting to separate themselves from their working-class roots, aligned themselves with the interests of the overlords and then were unceremoniously thrown out of the castle, like the unwanted shirt-tail cousins they are. Americans don't want to interpret what is happening as the class struggle that it is, but that's what I see happening, and it's a struggle that only the smallest percentage of the nine to fifteen classes will win of, none of which will be the "middle classes". All of us are merely serfs and cannon fodder to the overlords, despite our self-promoting labels. (Marx had a few things right.)

So, yes, I took a haircut, too, and I'm poorer today than I was Jan 2000, but am I devastated by those losses? Not hardly. Those were spurious gains. Like rains falling on the desert's sands, they evaporated for my failing to seize them quickly enough. My fault, not the market's, nor Alan's, or anyone else's. Mine alone. My plate was piled high, but I wanted even more, and in trying for more, I stumbled, dropped the plate, and spoiled the meal. But the stove still works, and the pantry is stocked. If I go hungry in any market, I have only myself to blame, as does any investor.

A separate point:

Think back to 1994. The economy was doing OK. People weren't easily and fabulously rich, nor were they being sucked into the frauds and scams that gobbled savings and investments. Then came the go-go years of 1995-99, aided and abetted by Greenspans's easy money policies. Then came the inevitable correction to that greed and those speculative excesses, and suddenly people felt poor, because they were no longer as rich as they once were. But is the U.S. economy falling apart due to that correction? I'd argue not. But it is now under more stress than is prudent, due to the current crop of governmental wastrels, who have spent a $360 billion budget surplus and are hell-bent on spending an estimated $1-2 trillion more on a war we don't need, to create a Middle East empire we don't want.

Obviously, Greenspan will accept no blame for his failure to pursue sound policies, but then what politician ever does? But neither are the common folk accepting any responsibility, either, because they keep re-electing the very same people who caused the problems they are complaining about. The mid-term elections were no sweeping mandate, but neither were they the repudiation they could have been. That's what has me worried. Not a very normal bear market, however temporarily and painfully disruptive it might be, but what Washington, DC is doing going forward that only exacerbates those effects, and their total lack of concern for the belt-tightening that should be the prudent response if laudable domestic social agendas, like education, health, and the environment, are to be achieved . Instead, they are trying to spend us back to the fat times, meanwhile curtailing civil liberties, rewriting the Constitution, and annoying most of the world.

My reading of history suggests that things aren't nearly bad enough, yet, to motivate meaningful change. So, if you think things are bad now, just wait a bit. Maybe as soon as the end of Ramadan, the unravellings will really being.

Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.