When I was growing up and for a long time into my young adulthood, ordinary, middle-class people did not generally invest in the stock market. That was a game for rich people and until the mid-1970s, there were no IRA and 401(k) retirement savings programs. It took a few more years after their creation before those plans became commonplace, so many working stiffs didn’t pay attention to the stock market for another decade or more.
In the 1990s, stock trading arrived for everyone, and online brokerages made it easy. When I would sometimes join my internet colleagues for drinks after work, all the talk among those 20-somethings – they were all 20-somethings but me – centered around comparisons of the killings they were making with online trades.
One might say, “I cashed out (stock name) after my profits hit 400 percent and I put it all in (stock name).” Another would one-up him or her saying, “I let mine ride for a few more weeks until it hit 600 percent.” Others would tout the stocks of companies where friends worked.
I would sit there listening, amazed at how cavalier these kids were about dumping hundreds, sometimes thousands of dollars into new companies (they were always tech or internet stocks) with, apparently, little knowledge or understanding of the businesses they were investing in or their prospects for future growth.
Assuming I was mucking about in the NASDAQ too, someone would inevitably ask, “How are you doing, Ronni?”
“I don’t buy stocks,” I would answer. “I don’t understand how to know a good company from an iffy one and I’m not willing to take a chance on losing my money.” Sometimes I would add, “It’s just a big casino, you know, no different from Las Vegas or Atlantic City and I suspect, like those casinos, the deck is stacked in their favor.”
Always, always, there would be a chorus of, “Come on, Ronni, you can’t lose.” “Tech stocks can't go down, it's a new world.” “I’ve never lost a dime.” “It’s easy, I’ll show you.”
Undoubtedly they thought (although they were polite enough to not say it) I was an old fogey stuck in her old-fashioned ways. Once or twice, I mentioned the Great Depression, getting only blank stares in return. (What ARE we teaching kids in school these days?) If they had heard of it, I suspect they believed it was ancient history that had no relevance in the final decade of the 20th century.
Then, in 2000, the dotcom bubble burst and all those young people lost a lot, many all, of their money.
Investments of all kinds always go up - and, they always go down. My apartment in New York City’s West Village was so charming and located on such a beautiful street that never, in 25 years of ownership, did a month pass without an unsolicited offer to buy it. During the recession of the early 1990s, one offer was 20 percent below the price I had paid in 1983 - about right for the market at the time.
I didn’t care. I wasn’t interested in selling and at age 50 or so, I had the time to ride out that Manhattan real estate dip. When I did sell in 2006, although there were already unnerving intimations of the coming housing decline, I got out under the wire and made an excellent profit.
There have been numerous recessions, downturns and, conversely, bull markets in my life and it didn’t take any effort or certainly no special knowledge on my part to learn from them that nothing goes up forever.
Nevertheless, against all historical evidence that even a financial dolt like I can see, Wall Street “experts," supposedly smart people touted as masters of the universe with advanced degrees from Harvard and Yale, believed prices would never drop. These are the same people – one named Henry Paulson - who are now being paid taxpayer big bucks to run the bailout of the banks.
One of them, hired by Paulson to oversee the Troubled Asset Relief Program, was about the same age as my exuberant young colleagues back in the days of the dotcom bubble.
What other irrational ideas, I wonder, do these people believe in now, and are Senators Barack Obama and John McCain, whichever becomes president, gullible enough to believe in them too?
[At The Elder Storytelling Place today, Norm Jenson holds forth on the up/down, on/off, left/right choices we make every day in The Button.]