Fool Me Once…

Here’s something I don’t want to write about, but I’m going to anyway.  I can’t be the only person feeling it. 

I feel like a fool.  Alright.  There it is. 

I’m no stranger to investing.  I’ve been an active investor for more than 15 years.   I worked in the investment industry.  I’m passionate about the industry.  I love following the market.  I watch CNBC.  I devour books and financial websites.  A crisp clean ol’ fashion copy of the Wall Street Journal and a hot cup of French roast coffee go together like risk and reward.

I weathered the Russian debt default.  I watched Y2K pass uneventfully.  I rode the dot.com bubble to its last.  I was there for 9-11.  I watched the change of the guard from Greenspan to Bernanke.  I watched the Enrons blow up, and the housing bubble burst.   Through it all, whenever the market was down, it was time to load up on stocks—they were ON SALE!

But, when 2008 blew-up the stock market, I knew something different was happening.  I could feel it in my gut.  Something different.  Something systemic.   Something the news reporters weren’t reporting, I suspected, because they themselves did not understand what was happening.  Something was happening outside the paradigm of conventional thinking—outside conventional investing, financial, and economic models.  Not because it was too complicated, but because it was camouflaged in simplicity.  It was too obvious.  But, hey, I didn’t see it either.  So, I started looking for it.

In the fall of 2008, I piled into books about simple basics.  Back to basics.  Basic economics.  But, that wasn’t basic enough.  So, I searched even deeper, lower, more rudimentary:  Money.  Starting with the history of money.  This is where I started finding answers.  Then I researched banking.  Precious metals, intrinsic value, fiat currency, inflation.  Then I moved up into monetary policy and government institutions.  The answers unfolded.  I saw the all too obvious.

When the answers came, they revealed what was happening in the market and economy.  I understood why the Bush and Obama administrations were bailing out the banks, bailing out Fannie Mae and Freddie Mac, bailing out insurance companies, bailing out pension funds, insuring money market accounts, taking over student loans, forcing mergers of financial companies, bailing out the auto industry, suspending critical accounting reform laws, giving the Federal Reserve a blank check to print money, and why nobody was held accountable—no hearings, no trials, no perp walks, no jail, no nothing.  Whatever was happening, the Bush and Obama administrations were scared to death.

The government was scared to death, and they weren’t telling the American public what was going on.  By December 2008 I knew enough.  I knew enough to know I should be scared—scared for my family.  I’m a dad and a husband.  Enough said.  Time for my game face.   Prepare for the worst and hope for the best.  My self-study continued, but it was time to act and act NOW.

Although the “worst” I imagined was far-fetched, what I imagined was so bad that ANY possibility that it could happen was reason enough to take precautions.  Let’s just call a duck a duck:  “worst” case scenario was complete collapse of the economy AND government authority for days, weeks, or months.  Not likely, but possible.

More likely, and all but an absolute mathematical certainty, the economy was headed into a great depression.  The Greatest Depression.  A depression lasting a full generation, 20+ years.  The laws of economics are immutable, the nature of man predictable, the history of mankind knowable.

So, here we are 2014, 5 years and 4 months later.  There’s plenty to complain about, but total complete economic Armageddon is not one of them.

In 2008 the Dow dropped from its recent high 14,000 points (in 2007) to 6500 points (2009), wiping out 15 years of gains.  6500 points was the Dow’s low.  Today, nearly six years later, the Dow is pushing 16,500 points!  More than double from its low in 2009.

I could go into how and why the stock market has topped 16,500.  I could go into how Wall Street looks far different than Main Street.  I might talk about how I now watch CNBC with little more interest than to watch guest speakers squirming and wiggling and skirting around the truth which is known by all the big players today.  But, that’s not this post.

Here we are, 2014.  Do I feel the fool six years since 2008?  Well, yes.  Though not in all respects.  Undoubtedly, my ex-wife thinks me a fool (no, that wasn’t one of the reasons she gave for divorcing me).  My ex-in-laws thought me foolish.  Yes, I feel a fool to my own family for my repeated warnings of dire times ahead.  Most my friends thought I was crazy.  And yes, I get down on myself sometimes—thinking myself the fool.  It’s not a good feeling.

Since when did “preparing for the worst and hoping for the best” become foolish?  When did “a father protecting his family” become unfashionable?  When did people decide the Great Depression of the 1930s didn’t really happen?  When did people conclude history does not repeat?  When did people accept inflation is a good thing, natural, and the norm?  When did people decide money is made by the government in the printing press?  When did people decide debt has no consequences?

Who’s the fool?

No one wants a prolonged global great depression.  The very threat of it threatens our national security.  Who would trade feeling a fool for economic Armageddon?  No one.  So, I live with my hurt pride.  It’s not the first time my ego has been bruised—this aint my ego’s first rodeo.  I feel the sting of jeers from those I warned of hard times coming, though all these years later it’s less jeers and more like soft pity.  My family and friends love me, so that’s what counts.

The systemic problems that caused the crash of 2008 have not been addressed.  Not one bit.  In fact, I believe the government has doubled-down on the problem, hoping it will all magically go away.  That’s the funny thing about truth, it always outlives a lie.

Fool me once….

 

In God we trust.

Oh, and keep the powder dry.

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