Monday, June 30, 2008
Friday, June 27, 2008
Friday, June 20, 2008
Tuesday, June 17, 2008
Monday, June 09, 2008
- "You know that guy has been in the business for 33 years. He has seen the oil crisis of 1973-80, the high inflation and grinding unemployment of that time, Watergate, the Carter gas lines, the Reagan Revolution, the Iraq invasion of Kuwait, the collapse of the Soviet Union, the S&L crisis, Russia's default on it loans, the Tech wreck, the attempt to impeach a President, 9/11, the Enron scandal, Katrina, the Iraq war, the collapse of the dollar, and now oil at $135 per barrel. He says it is not different this time; that all these past crises proved only bumps in the road, and that progress continued after a period of acclimation or healing in every case; and to sell the world economy or the US economy short has been a terrible bet over the last 30 odd years. Furthermore, he says that it will continue to be a terrible bet as long as people are free and own the fruits of their own labor.
I don't know how or when the current crisis will be resolved, but I am confident that it will pass and that blessings will return. I do know that if we are patient, trust in long-term investing and the power of dividends, and not get caught up in the stuff of cut and run or how much we can pile on the wagon, that there will come a day when prices will intersect with values, which our models now say are about 25% lower than the current value of the average stock.
A Caveat: These are my opinions. Do not take them at face value. Go back and read about each of the crises I have mention here. See the headlines. See what the Wall Street Journal or the New York Times said. See if they were correct on anything and where they were wrong. Finally, see if you can determine how the crises was resolved; how things moved on.
I am basing my optimistic view of the future on my experience of a long series of crises in the past that somehow, someway got worked out. If we have entered a time where mankind cannot solve the problems of our own making, then my view is silly. But if the future looks anything like the past, we humans will figure out what went wrong, correct it, and move on.
Look at the list of crises I have listed; try to recall how you felt during as many of these times as you can. I think you will discover that Alan Greenspan was right: you felt very down and did not know how things could ever get better. Now look at them again and see if you can recall how each crises was resolved. Who were the players? Who helped us understand that doom and gloom were not the only attitudes permissible under the circumstances?