They say that wisdom comes with age.
The truth is, I haven’t noticed it.
If anything, resignation comes with age. If resignation is the same thing as wisdom, then I guess we get smarter as we get older.
What you have as you get older is the benefit of having lived through a few cycles of everything, so you’re resigned to the fact that things change. Therefore, you are not so quick to jump on the bandwagon, or that fast to jump off. And you know that what goes up, invariably goes down and vice versa. It’s amazing how smart everybody is on an up market and how dumb they get on a down market.
For example, when the high-tech market was red hot, I could never figure out why everyone thought it was all so great, particularly since the dot-com world didn’t seem to be making a lot of money, or, for that matter, any money.
People just seemed to be spending a lot of money. I had a few 20-somethings explain to me, in patronizing detail, that I was just incurably an “old thinker” and just about hopelessly mired in outdated economics. These 20-somethings declare the new Holy Grail is “market share.”
I could never understand how owning a 50 percent share of a money-losing market was somehow twice as good as owning a 25 percent share of a money-losing market. Apparently I was absent from school the day it was explained.
But like everyone else, I got caught up in the headiness of spiraling stock prices and figured, why not?
I really should of known better.
Karen and I went to a launch party for a dot-com company at Skybar at the Mondrian Hotel on the Sunset Strip. The party cost a fortune. The expensive champagne flowed. The place was populated with young, handsome Hollywood boys who were all so “au courant.” The girls were gorgeous with necklines cut down to their navels. It’s an inflexible rule–the lower the necklines of the hostess at the kick-off party, the higher the risk of investment.
The event was covered on streaming video, online and there was enough high-tech equipment to launch a spacecraft. The next giveaway [that this was a risky investment] was that Karen had a client who actually wanted to advertise on the dot-com company’s Web site and she spent the next few weeks trying to get a rate card and finally gave up when none was forthcoming.
Whatever was in their business plan apparently didn’t include doing business.
Fortunately we never put any money into it because there was a line-up of very smart venture capitalists throwing money at it already and the company didn’t want us. Thank heavens.
I know it’s always easy to look back and see with perfect clarity that the emperor had no clothes and it’s a lot tougher to do it prospectively. Still, I’m going to go out on a limb and make some predictions.
- It’s a safe bet to say the economy is going to shrink 10 percent or 20 percent and then it’s going to start on the slow road back. It needs that time so people can once again remember that stock prices don’t double every 20 minutes, and no one’s net worth can multiply geometrically, unless of course you’re in the energy business. But then, of course, you always risk being indicted.
- In the meantime, the pundits who previously were predicting a 30,000 Dow are going to be talking about the coming depression. They were wrong before and they’ll be wrong again.
- Some people are going to make money on the fall and again on the rise. Timing is everything and some people are really good at it. Unfortunately, I’m not very good at it, as I suspect most of you are not. Some people are really good at money. Recognize it’s a very rare skill, which is why it’s so profitable.
- The President’s going to take it on the chin a bit because the leader always gets credit for the ups and the blame for the downs, and there’s probably not a lot he can do about it either way.
- The talk show hosts will continue to shout at each other about the down economy and whose fault it is and it will mean just about as much as it meant before in the up economy.
- And lastly, if any of you have a really good stock tip for this new economy, please, don’t tell me.