By Bill Singer
First off, a happy and healthy New Year to all of you! Let's hope that 2009 doesn't even come close to 2008 --- I mean, geez, can the coming year be worse? Let's hope not!
Now back to the BrokeAndBroker.com blog.
You know how you sometimes do or say something, and at the time you do or say whatever it is that you did or said, you don't think much of it -- and then, afterwards, it turns out that what you thought was a fairly mundane act or comment suddenly gets blown up out of all proportion? No??? Oh well, then you're just not going to get my point here so you might as well go surf somewhere else on the Internet. Enjoy the porn or the puppies or whatever else floats your boat. As to my loyal readers, if you are nodding in knowing approval about the morphing of the banal into the off-the-charts, then you will appreciate this brief blog entry.
A few weeks ago, I participated in a Forbes Intelligent Investing Panel entitled Common Market Myths (December 24, 2008). Editor David Serchuk asked me what I thought was a somewhat innocuous question: What's been missed during the current financial crisis? To which I gave a somewhat thoughtful (but what I thought was a fairly mundane) reply. Go figure. My answer has prompted a flurry of emails to me. I also see that my comment has been posted on some blogs/sites. Not that it's given me an ego trip or anything, but, please, in the future, have your people call my people. We'll do lunch. Ciao, baby.
If you've seen only part of my comment or you've heard about it, please read the verbatim quote below. You can view it in full context at this link:
Bill Singer: For me, the one thing the public must learn is that there are no omniscient market gurus who know everything and can always predict the market. Far too many know-it-alls missed the coming crash and will likely miss the coming recovery (if and when that is). Moreover, while the public is often dazzled by Wall Street into believing that investing is a science, recent events have shown that it is far more an art, at best.
As I have so often lamented during my career, public investors will spend hours online searching for a model of a car to buy, will compare hundreds of prices, will visit many dealers and then browbeat the car salesperson into chopping away at the minimum sticker price; but, that same consumer will buy some unknown stock from an unseen stockbroker from an unheard of brokerage firm, and all too often do so based upon a television commercial or a glitzy Web site.
The lesson of this crash is that you must do your homework, you must retain a vigilant skepticism of easy riches and you must never invest money that you cannot afford to lose. Finally, just as most veteran lawyers learn to believe nothing that they see and nothing that they hear but to personally test and investigate everything, investors must now return to the markets with that same mistrust. There are intelligent folks out there who understand the markets and who make a professional effort to select worthwhile investments. Find them but don't trust them beyond your commonsense instincts. However, there are also plenty of Bernie Madoffs out there. Avoid them and don't trust the assurances of others.