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Paul B. Farrell
March 30, 2010, 12:01 a.m. EDT · Recommend · Post:
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Capitalist Anarchy and Lobbyist Bubble
First Take "º
Ford loosens the seatbelt
By Paul B. Farrell, MarketWatch
ARROYO GRANDE, Calif. (MarketWatch) -- Ten years ago this week we wrote "Next crash? Sorry, you'll never hear it coming." In 2000 the market topped at 11,722. Today the Dow's still under 11,000. We also predicted Wall Street's 2007 meltdown. Over the decade, we all watched Wall Street insiders get rich while they lost more than 20% of Main Street America's retirement money.
Worse, we predict they'll do it again in the next decade, 2010-2020. And yet, those arrogant, oblivious fat-cat Wall Street CEOs running their too-greedy-to-fail banks still believe they deserve mega-million-dollar salaries.
An extended rally in the markets will face new volatility as the Fed ends its mortgage-buying program, global markets editor Grainne McCarthy reports.
So as Jay Leno might highlight the investor's dilemma: "Let me ask you a question, if you continue investing for another decade with the same guys that lost 20% of your money the last decade, who's really crazier, Wall Street insiders or Main Street investors?"
That's a paradox I understand: Not only do I believe Wall Street will lose another 20% n the 2010-2020 decade, I also believe Wall Street's too-greedy-to-fail banks will again be so blind that they'll fail to see the coming collapse, probably in 2012, around the next presidential elections. And through it all Lazy Portfolios will keep beating the Street.
And yet readers keep asking: "Paul, why do you keep emphasizing the Lazy Portfolios while at the same time you're predicting another Wall Street collapse in 2012?" First, some context, check out the recent performance of the Lazy Portfolios, especially looking at their average annual performance the past five years through the 2007-2009 recession, then I'll explain why both positions are perfectly compatible and reasonable:
Data as of March 26
Living with paradoxes, dilemmas, contradictions, inconsistencies and sundry unexplained mysteries are all part of everyday life, right? Years ago rock legend Bruce Springsteen put it this way: "You've got to be able to hold a lot of contradictory ideas in your mind without going nuts. I feel like to do my job right, when I walk out onstage I've got to feel like it's the most important thing in the world. Also I've got to feel like, well, it's only rock and roll. Somehow you've got to believe both of those things" at the same time.
Springsteen's logic reminds me that it's OK if I warn American investors about how Wall Street's driving America into another ditch, setting us up for another major meltdown, while at the same time believe it's also OK to keep focusing readers on our Lazy Portfolios as a far better way of investing your retirement nest egg than gambling at Wall Street's casinos-for-losers.
Next, I add to Springsteen's remark the advice of another great man that keeps me going, Albert Einstein: "There are only two ways to live your life. One is as though nothing is a miracle. The other is as though everything is a miracle." And if your friends don't get it, remember, Einstein also said, "two things are infinite: the universe and human stupidity; and I'm not sure about the universe."
Springsteen and Einstein know how to accept everyday mysteries. They are why I can see two parallel realities at once: The coming "Collapse of the American Empire" and "End of Civilization," as historian Niall Ferguson, anthropologist Jared Diamond and others predict. Yet, at the same time, like Einstein, I believe in miracles, in the unknown. That keeps me from "going nuts" when I "walk onto the news media stage" and with a clear conscious believe in these two contradictory realities:
Lazy Portfolios: Why I can believe in Lazy Portfolios as a far superior way for Main Street's 95 million investors to protect their future retirement nest egg than gambling at the Wall Street's casinos-for-losers for another decade, from 2010 to 2020. And at the same time ...
2012 Collapse: Why I can also keep warning investors that Wall Street's too-greedy-to-fail, myopic, fat-cat bankers are destined to miss the next meltdown, and the negative consequences will be far greater for the economy, triggering the Great Depression II that Wall Street and their Washington puppets cannot push downstream onto future generations one more time.
Many readers may still question my logic. That's OK. Maybe they don't like rock music. Maybe they don't like nuclear physicists and war. Maybe they just love the thrill of gambling at Wall Street's casinos because it's in their brains and psyche. Whatever, it's OK if you don't agree with me. I get it. But before you keep betting at Wall Street's gaming table, remember what the great Nobel Economist Paul Samuelson once said:
"Investing should be dull. It shouldn't be exciting. Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas ... It is not easy to get rich in Las Vegas, at Churchill Downs, or at the local Merrill Lynch office."
Paul Farrell writes the column on behavioral economics. He's the author of nine books on personal finance, economics and psychology, including "The Millionaire Code," "The Winning Portfolio," "The Lazy Person's Guide to Investing." Farrell was an investment banker with Morgan Stanley; executive vice president of the Financial News Network; executive vice president of Mercury Entertainment Corp; and associate editor of the Los Angeles Herald Examiner. He has a Juris Doctor and a Doctorate in Psychology.
Ford Motor Co., after clinching the sale of Volvo to China's Geely on Sunday, announced plans Monday to shed about $3 billion in debt. So why isn't the company getting more kudos?
5:47 p.m. March 29, 2010 | Comments: 72
- GreenMachine09 | 11:39 p.m. March 29, 2010
"How Lazy Portfolios will whip 2010 Collapse http://on.mktw.net/cDYUDQ" 11:45 p.m. EDT, March 29, 2010 from MKTWFarrell
"The Capitalist Anarchy and the Lobbyist Bubble http://on.mktw.net/dn7ZsT" 11:21 p.m. EDT, March 22, 2010 from MKTWFarrell
"'Wall Street' sequel an omen of U.S. collapse http://on.mktw.net/cNc7o1" 11:25 p.m. EDT, March 15, 2010 from MKTWFarrell
"The rise and certain fall of the American Empire http://on.mktw.net/cFBTTe" 12:45 a.m. EST, March 9, 2010 from MKTWFarrell
"Wall Street is stealing another 20% from you http://on.mktw.net/cJDPAG" 12:59 a.m. EST, March 2, 2010 from MKTWFarrell
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