It’s time to revisit some of the posts I wrote during the October 2008 panic. This is one of my favorites . Today’s panic seems to revolve around missing a new bull market. As with all panics, it’s not whether you SHOULD panic, but when. My TWO words of wisdom on panic are…PANIC FIRST! I have copied the whole of the October 2008 post below:
There is panic people. You can choose to Panic or you can do as I do everyday and repeat after me…’I am TOO small to FAIL!’
Here is Wikipedia on Panic (you can’t trust Wikipedia though according to CalacANUS). Jason would prefer you to be on his closest 7,000 friends email list to get his version of panic.
Here are all the finance Books you can quickly read on the subject.
In fact, ‘Panic’ in my headline would be way better for Google juice, but that’s not this blog is about.
There is not much really useful to say in the middle of the PANIC that is upon us. I am in it with everybody else and trying to shut out as much noise as possible. I was at Kol Nidre services with the family and was expecting the sermon to be about PANIC. I was PANICKED about having to sit through it. In the end I missed the sermon as we left before it came, my first blessing for being in the ‘good’ book (Note to Rabbi’s – If you want an awake audience or any audience for your sermon, squeeze it in early). But I digress…
Panic is infectious. It’s a virus that will run it’s course, but each one is different. Rest assured THIS panic is the MOST talked about one before it ever happened, yet still so few have avoided the damage . How can it be that such a well documented debacle could cause such massive damage (the IBD mutual fund index is down 40 freaking percent this year).
This is a once in an investing life time panic ALREADY in it’s breadth and off the chart readings on a daily basis . To call an end to this would just be luck and therefore off limits here.
Here is why panic spreads. Otherwise smart people, who on the surface think they are calm, freak everyone out with their own passive aggressive panic. If you don’t believe me, Sequoia and Uber angel investing guru Ron Conway are just now writing letters to all their CEO’s and giving them advice on how to survive . I mean today?
No offense, but get over yourselves.
If you have a good business, these letters are ridiculous in the timing. Maybe force them to read this letter upon funding and make them memorize it, but at this point, it reeks of panic and fear.
I have been telling any of the CEO’s that will listen to me, to THINK about how we turn this panic into an opportunity. We all have weak investments and weak CEO’s, but a blast email on October 7th is absurd. Anyways, I am poor and they are rich, so that’s that. So while the rest of the world panics, you can panic too, or you can take a few steps back and remember how fortunate you are to be reading this blog, because if you are, you are ‘Too Small to Fail.’ So what do I mean by that?
I can’t fire myself. I am nimble and lean and have a plan. I see this panic and I want to think about the afterbirth of it. Panic’s end. If you are smart and a little lucky, you will survive in good stead and historically, great things happen. If you don’t believe me, take a look at this chart from my friends at Blackstar (I have an investment in their fund). We are in the worst 12 month rolling period of returns since 1937. If you look closely…what follows is investing NIRVANA (click below to enlarge)
dow_12month_rolling_return.pdf
In that spirit, put aside the panic for a moment and consider these possibilities:
DOW 20,000 during the Obama presidency (assuming he wins, otherwise Dow 1,000 and stop reading :) )
Bull market in financial companies no one has ever heard and a new industry no one knows about right now
Post war economic boom
Democracy and capitalism thrives in Iraq
America regains the respect of the world again via financial crisis leadership management success
Bull market in the dollar
Berkshire Hathaway will triple from here
Higher capital gains tax, lower payroll tax, and a lower fiscal deficit
Better internet porn (this one is pure bait to get me to actually post all the other ones here…and it worked)
Buffett will be the treasury secretary in 2009 or have a major role
U.S. taxpayers get all their bailout money back w/ interest
Regulations of credit default swaps which will be traded on the CME
The hedge fund industry gets bigger with fewer players
Does that mean you should bet the farm now?
NO
Does that mean you should not do what Cramer says and sell everything in common stocks you need to pay for a renewed subscription to TheStreet.com?
NO
I am not here to hold your hand and say everything will be hunkeedoree. This blog is not called ‘Your Mommies Bosom’ (although Note To Self: great Google Juice). You need to gut up, and know what your risk tolerance is. If you don’t, the market will bust you up.
I will tell you that I have been buying. I will be buying tomorrow again. I am too early so far, but I have a plan…and I am ‘Too Small to Fail!’
“DOW 20,000 during the Obama presidency (assuming he wins, otherwise Dow 1,000 and stop reading :) “
Nice smiley face… Har dee har har, this stuff is such a laff!
Sure – 20k DOW is possible. But just exactly what do you think the dollar will have to be worth for that to happen?
“My 401k doubled from 2008, but gas is $9 a gallon! Wish I had bought some gold, because it's up to $2500 an ounce!”
High stock valuations that aren't driven by organic buying do not create prosperity. The tail does not wag the dog, however much the tail would like to believe otherwise..
droppin' it like it's hot, dnarby, that's what i like to see. damn.
“DOW 20,000 during the Obama presidency (assuming he wins, otherwise Dow 1,000 and stop reading :) ”
Nice smiley face… Har dee har har, this stuff is such a laff!Sure – 20k DOW is possible. But just exactly what do you think the dollar will have to be worth for that to happen?”My 401k doubled from 2008, but gas is $9 a gallon! Wish I had bought some gold, because it’s up to $2500 an ounce!”High stock valuations that aren’t driven by organic buying do not create prosperity. The tail does not wag the dog, however much the tail would like to believe otherwise..
droppin’ it like it’s hot, dnarby, that’s what i like to see. damn.
It’s almost time to short the shit out of this market… Again.
It’s almost time to short the shit out of this market… Again.
I don’t care that gas could reach $9 in US over the next 10 years. Last summer it was above $10 in half Europe and it survived. People adopt. Take a look at the gas mileage improvement over the last decade. Another decade and we will be driving cars with 200, 500 and even 1000 mpg.
agreed. october was a generational panic and march was a generayional low.
the dollar is worthless perhaps, bit something will come to replace it.
agreed. october was a generational panic and march was a generayional low.
the dollar is worthless perhaps, bit something will come to replace it.
You don’t understand.
First, gas was already high in Europe. So going from $9 to $10 is no
big deal. It would be like a $0.30 hike here.
But we don’t live in close proximity like they do in Europe, we don’t
have nearly as much public transportation, and so as a result most
people HAVE to drive to get to work, school, etc… So $9.00 a gallon
gas would be a disaster for the USA. And if you think we’re going to
have 200 MPG cars with the current level of bureaucracy in both the
government and auto industry, you’ve been smokin’ some grean shootz.
Not to mention you missed the much larger and more basic point that if
the DOW goes to 20k… And gas goes to $9 and gold goes to $2500…
Then a loaf of bread will cost $7.50. A gallon of milk will cost
$9.00. And so on.
Long before the price of gasoline reaches $9 per gallon, people will had found an alternative – it could be higher gas mileage vehicles or using natural gas or something else that innovative minds will come up. Substantial percentage of the cars in Europe run on liquefied natural gas Too many people continue to focus on the effects of potential inflation. It won’t happen. The access to credit is harder and the US consumer has started a long process of deleveraging and saving. Stop worrying for things you have absolutely no impact on. If your thesis is inflation in certain sectors, build a plan how to profit from it and enjoy your life. The odds are that future generations will have better living standard that we have today due to tehcnological innovations. If bread becomes $7.50, a biotech company will come up with a low cost pill that will replace the need for bread. Higher prices of goods just create market for their substitutes.
I’m saying for DOW 20K we’ll have to see those prices, and not
necessarily with comparable purchasing power.
I guess we’ll have to wait and see.
I’m saying for DOW 20K we’ll have to see those prices, and not
necessarily with comparable purchasing power.
I guess we’ll have to wait and see.
You don’t understand.
First, gas was already high in Europe. So going from $9 to $10 is no
big deal. It would be like a $0.30 hike here.
But we don’t live in close proximity like they do in Europe, we don’t
have nearly as much public transportation, and so as a result most
people HAVE to drive to get to work, school, etc… So $9.00 a gallon
gas would be a disaster for the USA. And if you think we’re going to
have 200 MPG cars with the current level of bureaucracy in both the
government and auto industry, you’ve been smokin’ some grean shootz.
Not to mention you missed the much larger and more basic point that if
the DOW goes to 20k… And gas goes to $9 and gold goes to $2500…
Then a loaf of bread will cost $7.50. A gallon of milk will cost
$9.00. And so on.
I don’t care that gas could reach $9 in US over the next 10 years. Last summer it was above $10 in half Europe and it survived. People adopt. Take a look at the gas mileage improvement over the last decade. Another decade and we will be driving cars with 200, 500 and even 1000 mpg.
“DOW 20,000 during the Obama presidency (assuming he wins, otherwise Dow 1,000 and stop reading :) ”
Nice smiley face… Har dee har har, this stuff is such a laff!Sure – 20k DOW is possible. But just exactly what do you think the dollar will have to be worth for that to happen?”My 401k doubled from 2008, but gas is $9 a gallon! Wish I had bought some gold, because it’s up to $2500 an ounce!”High stock valuations that aren’t driven by organic buying do not create prosperity. The tail does not wag the dog, however much the tail would like to believe otherwise..
I don't care that gas could reach $9 in US over the next 10 years. Last summer it was above $10 in half Europe and it survived. People adopt. Take a look at the gas mileage improvement over the last decade. Another decade and we will be driving cars with 200, 500 and even 1000 mpg.
Between 1984 and 1990 Nikkei went from 10k to 40k. 25 years later, Nikkei is traded for about 10k. Many say that this is what deflation does and expect similar sideways action in the US markets over the next 20 years. We had it before. Between 1960 and 1980, Dow traded in a relatively tight range, before it exploded higher. I look at a 100 year chart of Dow and it looks so bullish. Part of the reason is real growth, another part is expanding of money supply. And did we expanded our money supply: from 1987 till 2001 it went from 8 trillion to almost 800 trillion. In 1987 the Dow was about 2k. Today it is close to 10k again. But the main reason of its growth is not neither economic growth, neither liquidity expansion. It is active management. Over the course of its history, members of DJIA were changed multiple times. It is not about the stock market, it is about the market for stocks.
Between 1984 and 1990 Nikkei went from 10k to 40k. 25 years later, Nikkei is traded for about 10k. Many say that this is what deflation does and expect similar sideways action in the US markets over the next 20 years. We had it before. Between 1960 and 1980, Dow traded in a relatively tight range, before it exploded higher. I look at a 100 year chart of Dow and it looks so bullish. Part of the reason is real growth, another part is expanding of money supply. And did we expanded our money supply: from 1987 till 2001 it went from 8 trillion to almost 800 trillion. In 1987 the Dow was about 2k. Today it is close to 10k again. But the main reason of its growth is not neither economic growth, neither liquidity expansion. It is active management. Over the course of its history, members of DJIA were changed multiple times. It is not about the stock market, it is about the market for stocks.
Between 1984 and 1990 Nikkei went from 10k to 40k. 25 years later, Nikkei is traded for about 10k. Many say that this is what deflation does and expect similar sideways action in the US markets over the next 20 years. We had it before. Between 1960 and 1980, Dow traded in a relatively tight range, before it exploded higher. I look at a 100 year chart of Dow and it looks so bullish. Part of the reason is real growth, another part is expanding of money supply. And did we expanded our money supply: from 1987 till 2001 it went from 8 trillion to almost 800 trillion. In 1987 the Dow was about 2k. Today it is close to 10k again. But the main reason of its growth is not neither economic growth, neither liquidity expansion. It is active management. Over the course of its history, members of DJIA were changed multiple times. It is not about the stock market, it is about the market for stocks.
agreed. october was a generational panic and march was a generayional low.
the dollar is worthless perhaps, bit something will come to replace it.
You don't understand.
First, gas was already high in Europe. So going from $9 to $10 is no
big deal. It would be like a $0.30 hike here.
But we don't live in close proximity like they do in Europe, we don't
have nearly as much public transportation, and so as a result most
people HAVE to drive to get to work, school, etc… So $9.00 a gallon
gas would be a disaster for the USA. And if you think we're going to
have 200 MPG cars with the current level of bureaucracy in both the
government and auto industry, you've been smokin' some grean shootz.
Not to mention you missed the much larger and more basic point that if
the DOW goes to 20k… And gas goes to $9 and gold goes to $2500…
Then a loaf of bread will cost $7.50. A gallon of milk will cost
$9.00. And so on.
It's almost time to short the shit out of this market… Again.
Long before the price of gasoline reaches $9 per gallon, people will had found an alternative – it could be higher gas mileage vehicles or using natural gas or something else that innovative minds will come up. Substantial percentage of the cars in Europe run on liquefied natural gas Too many people continue to focus on the effects of potential inflation. It won't happen. The access to credit is harder and the US consumer has started a long process of deleveraging and saving. Stop worrying for things you have absolutely no impact on. If your thesis is inflation in certain sectors, build a plan how to profit from it and enjoy your life. The odds are that future generations will have better living standard that we have today due to tehcnological innovations. If bread becomes $7.50, a biotech company will come up with a low cost pill that will replace the need for bread. Higher prices of goods just create market for their substitutes.
I'm saying for DOW 20K we'll have to see those prices, and not
necessarily with comparable purchasing power.
I guess we'll have to wait and see.
Long before the price of gasoline reaches $9 per gallon, people will had found an alternative – it could be higher gas mileage vehicles or using natural gas or something else that innovative minds will come up. Substantial percentage of the cars in Europe run on liquefied natural gas Too many people continue to focus on the effects of potential inflation. It won't happen. The access to credit is harder and the US consumer has started a long process of deleveraging and saving. Stop worrying for things you have absolutely no impact on. If your thesis is inflation in certain sectors, build a plan how to profit from it and enjoy your life. The odds are that future generations will have better living standard that we have today due to tehcnological innovations. If bread becomes $7.50, a biotech company will come up with a low cost pill that will replace the need for bread. Higher prices of goods just create market for their substitutes.
I'm saying for DOW 20K we'll have to see those prices, and not
necessarily with comparable purchasing power.
I guess we'll have to wait and see.