So that’s all it takes these days to sweep a good crisis under the rug – cut a nice big check to all the people who made the bad decisions that caused the crisis. In no time we erase a few weeks worth of stock market losses. Government has everyone’s back. No one fails. There are no losers in this market. No risk. You truly can’t lose. You could buy the very worst debt on the planet and governments will make sure you remain whole. What a deal. It’s capitalism turned on its head.
Equity investors are clearly catching onto this trend and snatching up stocks with total disregard for any risk. And why shouldn’t they? After all, government will bail them out when everything goes haywire. It’s almost a guarantee these days.
In fact, the sad thing here is that you’re almost better off causing the next big meltdown. It goes like this – ramp up risk, make huge profits on the way up, record bonuses for everyone and then when it all goes bust you take none of the losses. Instead, the government takes the loss, you get bailed out and you start the whole game over again! Sounds fantastic doesn’t it? That’s what our stock market can be boiled down to these days. I’ve never seen anything like it. It’s great for all the gamblers. And horrible for all the regular joes.
The can’t lose market is back. Buy something. Anything! Who cares. It’s all on sale even if it’s not. And when it goes bust you’ll get a brand new model courtesy of Government Inc!
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.