So what's this all about Baldur?
Is it about the money you lost in various dotcoms and telecomms in 2000? Or are you actually Abdullah Thawaba, a 28 year old Yemeni educated in London and Houston, posting your nonsense from an Iranian basement as a member of the crack Al Qaeda US Economy Sabotage Team?
In no particular order:
1. We are in a period of deflation. Deflation is painful to experience but is ultimately beneficial. Why? Stuff costs less.
2. This deflation is caused by: (1) broad productivity improvements in the US economy; (2) The recent entry of approximately 2 billion energetic and hungry people into the world free market trading economy.
3. Alan Greenspan understands this and is appropriately inflating the money supply. He also understands that his job is to set monetary policy by following the lead of the bond market, which sets the cost of money by the application of free market principles.
4. The relationship between the SEC and Wall Street is the same as it has always been. The SEC prosecutes law breakers while Wall Street tests the limits of SEC regulations currently in place.
5. The relationship between the SEC and public companies is the same as it has always been. The SEC prosecutes law breakers while public companies test the limits of GAAP accounting.
6. Some companies/individuals will always overdo it. You can guarantee that Enron senior management, for example, will eventually be punished.
7. Despite this, the US capital markets are the most regulated and orderly in the world.
8. A lot of people lost a lot of money in the stock market in 2000 and 2001. This always happens in periods of rapid technological change. The US railroad system, for example, was largely financed by European investors who lost 99% of their investment due to overbuilding and the creation of excess capacity. Same story for radio, the automobile, etc.
9. Despite this, there have always been sweeping and extremely beneficial impacts from the widespread introduction of new technologies.
10. With the exception of a small number of dotcom and telecomm stocks there has been no bear market. We have experienced a correction only in the broader market that will be as invisible on the charts in ten years as the Crash of '87 is now.
11. We are less than halfway through the greatest bull market of all time. This bull feeds on: (1) the end of the Cold War; (2) the birth of the Information Economy; (3) the low cost labor of the aforementioned 2 billion; (4) the striving of the US workforce to stay one step ahead of the 2 billion; (5) the extraordinary demographics of the Boomer generation.
12. Last but not least, the dollar is now the world's reserve currency. We have the luxury of getting the rest of the world to send us stuff we can eat or use and sending them pieces of green paper in return. This can continue indefinitely.
Now take an aspirin, go back to work, and invest in an S&P 500 Index Fund. In ten years you'll thank me. |
