APEC Leaders REALLY Need To Know Their History
Living in a market where real estate has plummeted by nearly 50% in just 18 months, I can tell you all the experts here in town (Las Vegas) have been saying we will be out of this mess and at the bottom in just 6 months. This has been happening for roughly 18 months running.
The experts, as we have come to learn, are not experts at all. We had all kinds of experts on Wall Street telling us they could get their investors 30% annualized returns with little or no risk by using fancy financial engineering (aka Credit Default Swaps and Mortgage Backed Securities). We all have since learned that not only was this impossible, but if we all bought into it en masse (like we did) then the entire financial system we call capitalism could be brought to its knees.
Well, here are the all the “experts” now telling us we could be 18 months away from being out of this current financial meltdown. Be very cautious when anyone tells us a date or a time frame of when this will all be past us and we will be back to normal from this financial crisis.
In the 1930′s, Hoover and many other leaders told us the same thing. They were all certain that a 50% drop in the stock market meant an incredible buying opportunity and things would be back to normal in months. Nobody ever thought it would take years to be clear.
Then the Great Depression took hold. Great Depression history would tell us to be very careful on how you allocate funds when markets are still in vast turmoil. If you invested when the stock market was down just 50% from its highs way back then, you would have lost another 35% of your capital and then toil way down there for another 8 years.
APEC leaders have no choice but to produce a headline – they are politicians. They need this to grab authority and to give us hope. I like that they did this, but they should really know their history and be very careful in giving people false hope. Not saying it is false hope, but as consumers of the headlines, we need to take it with a grain of salt.
