Strawman

Note that the blogger in question doesn't name names. Just fuzzy concepts. Many of us have been right, far too right for the cheerleaders' comfort. But human nature is what it is, people are forgiven for making mistakes, but for being right? Never.

Sean Paul Kelley February 1, 2008 - 1:29pm

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( categories: The Markets )

That is interesting

I personally had the experience of telling a friend that he didn't understand his non-qualifying stock option and will have serious financial problems if he went with his plan to exercise. I probably saved him from bankruptcy, given the stock in question tanked, and he knows it and if you ask him, he is thankful that I told him. That said, he has never forgiven me for bringing it up!

Joaquin February 1, 2008 - 3:33pm

Don't bring it up next time

Unless he seeks out your advice, let him take the consequence of his own decisions. And don't lend him any money when he gets into trouble; you'll never get it back. My experience with friends and family is to keep quiet about investment advice, and politics and religion for that matter.

Numerian February 1, 2008 - 6:15pm

I agree

That's why I have always advised my daughters never to discuss their finances with any of their friends. They're still young but I wanted to plant this idea in their brains early.

adrena February 1, 2008 - 8:19pm

Yeah, but it was a potential train wreck

He would have paid $280K in AMT prepayment on stock which he could not sell for two years. Its the $280K that he did not know about, didn't have, and would have to borrow.

What am I supposed to do? Just keep quiet?

Then as it turned out, and I didn't know either, the stock became worthless before two years so he would have had $280K in AMT prepayment which he could probably get back as an AMT credit at the rate of $3-4K a year for the rest of his life.

Oh and by the way, I only told him this because he wanted to discuss his stock option with me. I figured he was asking for advice but evidently he just wanted validation.

Joaquin February 1, 2008 - 9:10pm

Don't start on houses

My friends who bought houses. My friends who recently traded up because their 3-level many-roomed house was not big enough for them and their daughter. Selling: good idea. Buying: bad idea.

My friends who bought a house and discovered that it had been so badly remodeled that the county declared it uninhabitable. They then bought a second house two houses away.

I had a run of bad years during dot-bombunism - what do I know?

Forget it, Jake - it's AmnesiaTown

Tonsure Wimple February 2, 2008 - 4:56am

Buy High Sell Low

Not a winning strategy?

Joaquin February 4, 2008 - 3:23pm

I think you nailed it

Cassandra syndrome. People don't want to hear bad news even when it is borne out as true. If you were a Jew and someone told you about the holocaust in 1930, would you have believed them? And even if they were right and you had acted on that advise (leaving Germany I assume), would you really give them credit for it? Or god forbid, ask them what's next?

Reality has a way of dashing hope to pieces. So if you need the hope, you discard the reality to survive. In my experience that's just the way most people are built.

zot23 February 1, 2008 - 5:15pm

The bearish blogs are helping shape public mood

I think that's what this blogger is complaining about. If so many blogs discuss how bad things are, to the extent they reach a wider audience and counteract the usual Wall Street hype they can change the way the public thinks about the economy. Though even here, it is more of a symbiotic relationship - the public has been bearish for a long time at least about the economy and wage growth and job prospects. This blogger might be thinking that if everybody was more cheerful on the economic blogs the economy would perk up, but that is just fanciful.

As to the WSJ article ("keep the faith. Now is a great buying opportunity"), nothing on their editorial page has any credibility and hasn't for decades, IMO. These people have been riding supply side economics and tax cuts since Reagan, and they are as much a part of the Republican Party as FOX News. Which means they are an integral cause of our economic problems, and need to just go away.

The one thing the economic bears have gotten right has been the housing bubble, both in its broad form as a credit crisis, and in the details as to how it would unfold. It doesn't matter that these blogs have been preaching warnings for years and couldn't predict the exact date when the bubble would start imploding. It was hard enough describing the problem because there was a gigantic economic apparatus at work profiting from the bubble, denying it existed, and sneering at any doubters. It will take years for this mess to be cleaned up, but at the end there will be a number of blogs with credibility that the rest of the media will lack.

Numerian February 1, 2008 - 6:11pm

You hit it exactly!

The blogs predicting problems (Big Picture, Housing Panic, Dr. Housing Bubble) were ultimately correct. They predicted exactly what would transpire, while the MSM drifted along blissfully ignorant (if not patently on the side of the Ponzi schemers).

I never liked the terms "bulls" and "bears." It is just name-calling, which is another way of arguing so as to avoid the substantive reasons why someone is bullish or bearish. All that truly matters is who is correct and the soundness of the reasoning that led to their conclusions. The name-calling is just a distraction.

Mr. Flibble February 1, 2008 - 9:46pm

Steel mills

of the rust belt are not coming back.
The land around the TransTexas Corridor is not coming back.
Even the truckers jobs will fade away.
Even though I know the way
The task is only to name the day.

http://video.google.com/videoplay?docid=1070329053600562261

Lasthorseman February 1, 2008 - 6:21pm