The Crisis That Doesn?t Really Concern Anyone All That Much

Beyond Buy-and-Hold #78

By Rob Bennett

It?s an economic crisis!

We all say that. We use that word. But we don?t really believe it applies.

Actions speak louder than words.

The Republicans are still yelling at the Democrats. The Democrats are still yelling at the Republicans. If we thought it were a genuine crisis, we would pull together and get about doing whatever it took to solve the crisis.

We have never made a serious effort to figure out what caused the crisis. Something to do with bankers. Or with mortgages.


Do we seriously want to know the truth?

If you were sick and went to a doctor for help and he gave you a diagnosis that vague, you would demand better. If we were seriously concerned about the crisis, we would demand better of those offering explanations for what happened. We?re not really that worked up about it just yet.

Or maybe we don?t want to hear what we suspect they would come up with if we asked them to make a serious effort.

We all know what really caused the economic crisis.

I know this because I began talking with investors about the problem years before the crisis hit. It upset people when I did that. People tuned me out. The reason why not many are talking about the crisis in a serious way today is that they know that they will be tuned out too if they do so.

You caused the economic crisis

Yes — You!

And I did. Our friends and neighbors and co-workers helped. It was a community effort.

Stocks became insanely overvalued in 1996. We kept buying. Our common sense told us there was going to be a price to pay. That?s not what we wanted to hear. We were behind in financing our retirement accounts. We liked seeing those numbers moving up, up, up, whether the moves were phony and temporary and dangerous or not.

We told ourselves we would deal with the problem later. Now it?s later. But we still don?t want to deal with it. It?s too embarrassing. We invested so irresponsibly that we caused an economic collapse. How do you live with something like that?

You live with it the same way you live with any other screw-up. You acknowledge what you did. You give yourself a good talking to. But you?re not overly harsh with yourself. You acknowledge your humanity. You note that humans have been engaging in these sorts of screw-ups for a good long time now. For as far back as we have records (and I don?t mean just records of stock returns).

There?s magic in acknowledging a screw-up

The magic is that, once the words are out, the worst is behind you.

Everyone has had a time when he didn?t want to tell his parents about a bad report card. And he puts it off and puts it off. And he sweats and sweats. Finally, he is so sick of it all that he just does the deed.

Maybe the looks of disapproval are as bad as he anticipated. Even if that?s so, they are an improvement over the sweating he experienced during the time of living in fear. Acknowledging a screw-up is a nasty thing to have to live through. That?s why you want to make sure it happens as quickly as possible. You want it behind you. Just about anything is better than stretching out the waiting game.

This really is a crisis. We call it that because we know in our hearts it is so. The Democrats are not going to solve it with one of their government stimulus plans. And the Republicans are not going to solve it with one of their tax cuts. This is bigger than the temporary setbacks that can be dealt with in the ordinary way.

A tree can?t grow to the sky

This is massive. Stocks were overpriced by $12 trillion at the top of the bubble. We have a big debt to pay off.

We all start feeling better about things on the day we acknowledge that we caused it, that we brought on all the bad stuff. When we start talking honestly, we no longer are living in fear. Our confidence starts improving, our hopes for the future are restored.

We are screw-ups. We cannot duck that one. It?s foolish of us to try.

But we are not permanent screw-ups. We have recovered from this sort of thing before. By facing the music. By saying the hard words and doing the hard things.

You caused an economic crisis, dear reader.

Now own up to it.

And get about the business of relieving all the human misery you have caused, you bum!

Rob Bennett has recorded a series of podcasts on invest it wisely. His bio is here.


Related Posts:

The Question That Should Terrify Investors
Your Favorite Investing Expert is NOT Your Friend
Am I Crazy For Being Out of the Stock Market for 14 Years?
Most Stock Investors Are Gambling With Their Retirement Money
Risk-Free Stock Investing?
How Big an Advance is Valuation-Informed-Indexing Investing

( Photo from Flickr by Helico )

Leave a reply