Most people have NOT been hurt yet. Sure there are those that were tech-heavy. If they have held, they have been beat up. But most people are well diversified in multiple mutual funds, and they are sitting on low entry points from the early 1990's at least. I have not seen the statistics, but I'd bet a very large percentage of current mutual fund holders entered the markets in the early to mid 1990s. The Dow was just beginning to exhibit "irrational exuberance". Most of these people still look at their portfolios in terms of how much they are down from the peak. Most have watched their $150,000 go to $600,000 and now back to something like $475,000 if they were well diversified. They still "feel" pretty safe. They will not feel the panic until they are approaching the $350,000 level. At that point, self-preservation takes over. Thoughts of "potentially" watching the ridiculous gains over the past 10 years evaporate will actually take heart. This is when the mutual fund managers will begin to jump out of buildings, because they will not have the ever-flowing supply of other people's money being handed to them. This scenario would look so different if the markets had not been run up on FRAUD over the past few years. If honesty had prevailed, steady growth would have taken that hypothetical person's $150,000 to about that $350,000 level, and they would have been content and happy with the gain. Now, because of FRAUD and unrealistic expectations, these same people will not be grateful for having $350,000 from their original $150,000. No, they will mourn the LOSSES from the peak at $600,000. This will then turn to despair as they finally sell and little by little, those who do not sell early will watch their $350,000 go to $250,000 and $200,000. They will still be a little ahead of the "irrational exuberance" level, but they will be most miserable. It could have been avoided, but the President, the Congressman, the Fed chairman, the corporate CEO, the broker, the analyst, the banker, the executive, the teacher, the truck driver, the janitor, and the housewife all got caught up in the "easy, simple" way to make money. Just give it to the market and get rich quick. Entire industries sprang up to feed the frenzy. Television shows were produced to feed the masses. Magazines were published to help everyone get rich. Newsletters abound with simple ways to take part in the party. CNBC has become the show of choice playing in hotels, health clubs, and gas stations. Everyone gets rich. The MARKET has become America. Now, the MARKET will psychologically cripple all of the participants. A few rules from the Fed, honesty in the corporations, accountability in the laws, and all could have been avoided. It reminds me of a joke.
This really frail, wrinkled old guy goes to the doctor. The doctor says, "You are amazing sir. To what do you attribute your longevity?" The old guy says, "Fast women, fast cars, lots of alcohol and tobacco, and illegal drugs each and every day." The doctor is amazed, and remarks, "Why that would kill most people. You really are amazing. Just how old are you, sir?" To which the old guy replies, "Why, I'm twenty three."
That's the Clinton philosophy adopted by a nation and practiced by corporations and individuals for about 10 years now. The corporations are now frail and near death. Individuals are laden with debt and worry. Their perspectives, expectations, and emotions are twisted, unrealistic, and soon to be fragile. Living like this always produces the same results. This is not going to be pretty. Zeev may "take off his bear suit" and do fine going in and out. But the average American investor will get butchered in the end.
I remain,
SOROS |
