I sincerely hope you’re like me. Innocent. And that you’ve been waiting for this for a long time. For all these shortsighted, un-learned, debt-loving, over-leveraged individuals and companies to fall flat on their ignorant faces. Because now is the time to celebrate. The party is in full swing. It’s on. You have done your homework and now it’s vacation time. You have learned the lessons from classic books such as Extraordinary Popular Delusions and the Madness of Crowds and The Great Crash. You know that history repeats itself. You know excess leverage causes catastrophes. You cannot wait for the the jury to return their verdict because you know you’re off the hook.
You have what it takes to make it through these “tough times” because you understand the consequences of too much dumb money. Like me, you have been looking forward to this Noah’s Ark-style cleansing for what seems like forever, and you know—or maybe just hope—it won’t be over quickly so you can extract every last ounce of enjoyment. Not because you enjoy seeing others suffer. No. But because your hard work has helped you sidestep the pain and you are proud. Like me, you tried to warn others. To no avail. Like me, you’ve switched your assets into gold, euros and Swiss Francs. Like me, you’ve invested in the most incredible mutual fund for right now, Permanent Portfolio (PRPFX).
To those who are hurting, I feel no compassion. You deserve all your pain. You deserve all your losses. And more. You have not read enough. You have not sacrificed enough. You have not slaved away for years, researching anything and everything financial. You, like most naive Americans, believe making money in the markets is easy. That it can be accomplished solely by patience and perseverance because “investments grow over time.” That it doesn’t take constant monitoring, adjusting and reflection. That it’s a science, not an art. That it doesn’t take every last bit of effort to understand all the variables in play, not just a selective few.
For too long, you have ignored the lessons of the past. For too long, you have ignored the variables working day and night against you. For too long, you have given into blind greed. For too long, you have succumbed to the marketing ploys of “experts”, whose scripts have been written by and firms staffed by those just as—if not moreso—ignorant than you. Just like you, those people wanted to earn money alongside all their friends, without understanding and considering the risks, downside potential and economic cyclicity. Just like you, they believed the US was immune to economic disaster. Just like you, they thought Wall Street was run by intelligent people. For too long, you have gotten away with all of this.
For the past few years, you loved rubbing all the money you were making in my face. For the past few years, you would say, “Why are you still in stocks, don’t you know real estate is the place to be?” and “I’m a trader like you, I just trade houses for bigger gains!” For the past few years, you would ask me, “Why don’t you use leverage, you could borrow a lot off your $1 million, then you could be making the serious money like us!”
Now it’s time you pay for your sins. Now it’s time you learn how dangerous leverage can be. Now it’s time you see just how illiquid real estate can be. Now it’s time you realize how Wall Street works. Now it’s time to attend Economics 101 taught by the professor himself, Mr. Supply and Demand, and his TA, Mr. Margin Call. Now it’s time you sit front and center—unable to doze off—because the presentation is your financial future going up in smoke.
Am I being too harsh? Who cares. I do not matter. I am not the judge or the jury. I am just a spectator. A blogger. I am visiting you in jail. This is your chance to tell the world your story. If you’re lucky, it will become a movie starring George Clooney.
No laughing. No smiling. No jokes. This is no laughing matter. You’re being charged with economic ignorance of the first degree, how do you plead?
Posted in Books, Fess Up Time, Rants