On yet another Friday the 13th, be safe and be smart. And, watch out for black cats crossing in front of you. In the spirit of the day, let me offer a few foibles and follies for your contemplation.
Per our friend Scottie’s post, it always makes sense do your homework and be prepared for whatever comes your way. Please take about two minutes to watch the video of White House secretary’s Jen Psaki’s response to a reporter question on the claim of GOP support for Senator Rick Scott’s economic plan. Trust me, it is worth the watch. See below for the link to Scottie’s post.
I apologize for a little bit of morbid humor, but it is Friday the 13th. I once read the true story of man who is about my age now being diagnosed with prostate cancer. Being married for many years, he objected to the doctor’s insistent recommendation of a more invasive surgery that would leave him impotent. He said making love with his wife was the greatest joy in his life and he pursued other procedures. After being cured for twelve years and enjoying his love life, he read the doctor passed away. The man saw the obit and smiled that he had outlived his doctor, noting to his bride, the doctor makes whoopie no more.
There is another true story I read about an older New Jersey woman who refused to sell her coastal property to a famous developer who would later become a notorious former US president. The developer wanted her property as it was next the casino he wanted to build. To his chagrin, she denied every advance to buy her property, even the threat of lawsuit and he exhibited his famous temper. A few years later, as the casino went bankrupt, her property was still standing. And, she smiled that she had outlasted the investment.
In a news report following the housing crisis in 2007-08, one of the investment banks that went under was Bear Stearns. About a year before this occurred, a financial analyst got a meeting with the CFO of the organization as he wanted to forewarn them. The analyst saw the banks and finance companies selling mortgages to people who could “fog a mirror” as their only review. These mortgages were packaged together (called Collateralized Debt Obligations) and stamped as good risk and sold to investors by folks like Bear Stearns. The analyst told the CFO he had a model which showed Bear Stearns would go under as a result. The CFO thanked him and asked him to leave. The first fallacy was the CDOs being stamped as good risk as a lot of bad risk together does not make it good. The second fallacy is the Bear Stearns folks assumed the market would always go up, which is not a realistic assumption.
These stories may seem unrelated, but at the heart of them is to two underlying themes
– do your homework and be prepared
-if you know what you want and know the options, stand firm in your mission.
The Bear Stearns story is not an outlier as several entities either went under or had to merge during the Housing crisis. The movie called “The Big Short” based on Michael Lewis’ book and starring Christian Bale, Ryan Gosling, Brad Pitt, Steve Carell, et al, defines what happens when supposedly smart people don’t know what they are investing in. See link below to a summary of the movie.