It seems that fear and greed have taken firm hold of the world. Aided by instant communications that keep us up-to-the minute on everyone else’s fear and greed, we are able to spread this contagion everywhere. In good times, we want more: greed (or in stock market parlance “buy, buy, buy, borrow and buy some more”), in bad times we want to hang on to what we have: fear (or in stock market lingo, “sell, sell, sell, bail me out and sell more”). The Herd mentality takes over. I thought that bulls moved in droves and bears in litters but their owners seem to move in herds.
Now we are heading into the double-dip recession that everyone dreaded. But this is more than that roller coaster. Henceforth, there is going to be a rapid dipping and bobbing that will come with every byte on the news ticker now that we have got everyone psyched for flight. Need a “sell” reaction? Just drop some bad news from the Street, fact or fiction. Need a “buy”? Publish an optimistic financial outlook, fact or fiction. It is as if someone with the right read on people’s panic buttons could become the next Public Enemy #1; and you don’t have to kill anyone to get there, just drop those poison news snippets like droplets from the Chinese water torture machine and watch everyone squirm.
My financial advisers recently advised me to sell or “de-risk”. I replied, “Man, life itself is a risk. A guy wakes up in the morning, coughing, and finds blood in his phlegm and is told that he has lung cancer – what can you de-risk here? A woman crosses the road, is hit by a car, and is history – de-risk?” I told my financial advisor to not waste his time on me. I have other, better, things to do than waste my time following the herd.
What my investment strategy boils down to is this: do I find the world still a good place to be in, is the majority of its enterprises honest and therefore would I want to remain invested in this world? And my answer today is “Yes,” the world is still a good place, despite a bunch of panic ridden people in positions of influence running around like chickens with their proverbial dicks (or was it necks) cut off.
They would be better off taking a deep breath and asking themselves some deep questions:
a) Why do you have to keep continuously growing exponentially, and then punish yourself when you don’t?
b) How can you expect to live off other people’s money (e.g. bailouts and borrowings)?
c) Can you gear your lifestyle to be a net producer than a consumer? If we all did that the world will be left with more when we leave it than when we came into it.
d) Why does winning at all costs for oneself matter more than winning for mankind? This question is especially aimed at those deadlocked politicians who cannot see the bigger picture and are out to pummel each other like punch drunk opponents in an Ultimate Fighting Championship final
e) If value is inflated, it will to be taken out. If value is depressed it will rise to its true worth. This will happen whether markets panic or not, through a rapid process or gradually. Let buyers decide. Your excitement only clouds this decision making – so shut up and step aside, or go on holiday if you cannot take the pressure.
So having said my piece, I returned to my day job, grateful that I still had one.