Fear Not

A few days ago I received my annual statement for my 401(k). The results were pleasantly surprising; the return for the year came to just under 29%.

That’s my best year’s return ever.

So what did I do to be blessed with such a superb return? Absolutely nothing.

That’s right; nothing. At the beginning of last year my employers suspended the 401(k) match, so for the whole of last year I did not put in a penny. Aside for a mid-year portfolio re-balance I did not move any money in or out or change investment options. Another 401(k) – for a previous employer – gained 28%, so this is not rocket science.

The irony is that after a two year diet of non-stop gloom-and-doom from the media, they have been silent about this.

I am not ignoring the current situation, nor am I castigating those who are suffering, but when you get right down to it, most of the problems we are experiencing are the consequences of stupidity in one form or another.

  • The mortgage/lending/credit/financial crisis was caused by a combination of stupid borrowers and stupid lenders (I refinance my mortgage in the middle of this “crisis” with no trouble at all)
  • The financial markets “crisis” was caused by board-level stupidity and too much debt.
  • The unemployment crisis was caused by excessive outsourcing, and short-term thinking. Result: short term cost savings, long-term loss of skills.

It is just a shame that so many thousands of people and families have found themselves in dire straits as a result of the stupidity of others.

The media have referred to the current situation as “the worst recession since the great depression“. They are wrong and dangerously so. I have lived through worse. This too shall pass.

They also fail to learn the lessons of the great depression. The Back in the ’30s, the Government tinkered incessantly with the economy for many years; they tried bailouts, they tried stimulus, they tried takeovers and created entitlement programs. But all the King’s Horses and all the President’s men could not cure the great depression – World War II did – though along the way they did a great deal of long-term harm.

What we need is a long term strategy and a common vision. A Government that restrains itself from trying to take charge of everything (I have never had a problem that Washington DC has solved) and leaders of Industry who will take the long view instead of the next-quarter bottom-line view.

This too shall pass. Fear Not.

Now Reading: The Public Domain: Enclosing the Commons of the Mind By James Boyle

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