Well you dad-gum
You better pay attention
You're sittin' up there
Like a fools convention.
- Roger Miller
I am angry. I am frustrated. I am disappointed, annoyed and
enraged. All at the same time.
Today, I did something I've advised dozens of friends, family, and
clients not to do. I logged onto my brokerage account and looked at
my balance. Without going into details, let's just say that knowing
the market is down 50 percent is a far different from seeing your
actual account balance cut in half. Call it a "coming of age" of
Over the long run, stocks rise. This is a concept pounded into all
of us whether in school, the media or around the water cooler. It's
a fact we all know. However, through last Friday, both the S&P
and Nasdaq are below the value 12 years ago. I guess the long run
is a lot longer than we all thought.
But the deflation of my account balance is not entirely what's got
me down - I believe I will eventually recoup all my losses and then
some. The real cheery news is the coming bill for all these bailout
plans even after they are successful.
Truly, these are not bailout programs at all, but more like
investment programs. I believe that over the long run these
investment programs will be fruitful both in terms of getting the
markets to function again and in terms of returning invested
capital to the government, who will then decide whether to pay back
the taxpayers. And there you have the crux of the issue.
At what time in our federal government's history did it pay a true
dividend back to its shareholders - the taxpayers? None that I can
Once capital invested in firms such as AIG, Fannie, Freddie, the
banks (and perhaps soon the auto companies, municipalities,
shopping malls, and maybe even luxury jewelers) is returned, my
best guess is that some of that cash will be used to pay down debt,
but most will be quickly shuffled into new government programs.
This may include the provision of newly invented "rights" such as
amusement park tickets or pet insurance, perhaps. In any case,
using history as a guide, bloated bureaucracies will surely be
What if they do decide to pass this return of capital back to
taxpayers? Wouldn't this be an excellent time for a little wealth
redistribution? If so, I believe the vast majority of ISO readers
will be included in the "rich" category, leaving them with paltry
"B-class" dividends after having paid the "A-class" price.
The cat is out of the bag now. The government has their hands deep
in our pockets and it will be up to us, the voters and taxpayers,
to ensure we retrieve our invested capital once its goal has been
accomplished. If you haven't already, it will soon be time for you
to let your representatives know how you feel.