Set forth below is the text of my response to the comment put forward by Mark that was detailed in yesterday’s blog entry:
It’s my belief that we are ALL on the same side, Marc. I include the Buy-and-Holders in that. I include John Bogle in that. I include the Fed in that.
Your description of “the Fed dangled poison in front of us, Wall Street told us it was “mmm good,” and we lapped it up without reading the bottle” is close to being perfect. It’s lacking only one element, in my assessment. The element lacking is a discussion of MOTIVE. This stuff is not hard. We have lots of smart people in the finance industry and in the Fed and among our political leaders. Why didn’t anyone DO anything before things reached this point?
You hint at the best answer to this one when you note that you yourself didn’t see that the emperor was wearing no clothes until after 2000. Why didn’t you see then what it is so easy for you to see now?
Humans are flawed creatures. We are given to self-deception. When we want to believe something, we believe it, no matter how big the mountain of evidence is telling us we are wrong.
This is exciting news. It doesn’t sound exciting at first because it sounds depressing to think that humans can be so easily and so totally fooled. But, if you think it through a bit, I think you will come to appreciate that we have some truly amazing possibilities that will be opening up to us in coming days.
What this tells us is that there is not bad motive here. Not on the part of the Fed. Not on the part of the Stock Selling Industry. Obviously not on the part of investors. The root problem here is cognitive dissonance, not bad motive. That means that all this can change on a dime.
It goes to your Easter Bunny scenario. I do NOT think that it is believing in the Easter Bunny to believe that we can turn this around. All of the people who today endorse Buy-and-Hold WANT to invest effectively. We have available to us today a powerful communications medium (the internet) to let the entire globe know what really works as soon as people reach a point where they are able to take it in. We can change the history of stock investing overnight.
People are not dumb. People are not bad. People are CONFUSED. We today have research that did not exist in earlier economic crises that can be used to help dispel that confusion. When people learn the realities of stock investing, our entire economy is going to become more productive. Not by a little bit. There are going to be TRILLIONS of dollars being put to better uses than they have ever been put to before because in all earlier times people did not have available to them the research needed to know how to invest their money effectively.
We’re going to see another crash. That’s going to be the turning point. That is going to be the thing that breaks the resistance of those who today cannot accept that they made a mistake and have been investing ineffectively all these years. After the next crash, we will be able to discuss what works on every discussion board and on every blog on the internet. We are going to be able to get the word out to millions in no time at all. Investing will never be the same again.
We are talking about something akin to the invention of electricity. We are in the process of changing the rules of the game in a dramatic way. We are going to have the Fed working it hard on our side. We are going to have Bogle working it hard on our side. We are going to have all the newspapers and magazines and television shows working it hard on our side. There is not one person alive who does not want to know how to invest effectively. There is not one investing expert alive who does not want to give good advice to his or her clients or listeners or readers. We are going to have huge leverage working to rebuild the greatest economic system ever and to transform it into something far more productive and humane and LOVING than it has ever been before.
It’s always darkest before the dawn. This economic crisis was a dark and rocky patch of ground that we had to walk through to get to the promised land.
Or at least that’s my story — and I’m sticking to it! (I cannot bear to imagine the other possibility!)