Paying for our indulgences
I, too, have been opening my financial statements each month with dread and reluctance, as if they are letters from a crotchety old aunt who considers bad news the only news worth sharing. And I sympathize with those who are forced to put off retirement because their nest eggs have shrunk almost overnight.
However.
The wailing and moaning have got to stop.
We’re sounding a bit too much like the guy in New York who’s suing Burger King and three other fast-food chains because, after four decades of eating their fatty hamburgers and greasy chicken, he is now obese and diabetic and has suffered two heart attacks.
“They said ‘100 percent beef.’ I thought that meant it was good for you,” the 272-pound litigant said.
The man is a dope. (He’d be played by Jack Black in the movie.) But what do we say about those of us who bought stock in, say, Priceline.com, the Web site that sold leftover airline tickets and hotel rooms?
At one point, the market value of Priceline.com was higher than that of every U.S. airline combined. That valuation made no sense. We knew it made no sense. How could a Web site that sold other companies’ discards be worth more than the companies themselves? But we bought the stock anyway, enjoying a state of denial as deep as the fat man’s.
Then, the stock price fell almost 97 percent — to where it probably should have been all along.
Naturally, we want to blame everyone but our dopey selves. It was corporate corruption and CEO greed and accounting fraud. It was Enron and WorldCom and Global Crossing. It was company directors abdicating their fiduciary duty to shareholders. It was the media hyping every cute startup as if it was the most fabulous find since the golden goose.
All fair targets. All worthy of plenty of blame.
But it was also us.
In retrospect, we can see how it happened. We suspended our common sense, figuring that if the smartest minds on Wall Street were gushing about the emperor’s new clothes, then it must have been our own eyes, not theirs, that were defective.
We saw people making 20 percent or 30 percent on their investments — more than double and triple the stock market’s historic rate of return. We plunged in, not quite understanding how it all worked and steadfastly pretending that such high returns carried no risk. We plunged in as if all the rules of life — if something looks too good to be true, it is — didn’t apply in this new anti-gravity economy.
“Everybody can’t get rich for doing nothing,” says Leland Faust, a San Francisco financial manager named among the Top 100 in the nation last week by Barron’s.
Now that rates of return have plummeted, as history and common sense dictated they eventually would, we’re shocked and dismayed, bemoaning our need to work now until age 67 instead of age 62 or shelving plans for the condo on the water.
The people hurt the most are those who entered the market in the last few years, answering the siren call of the TV talking heads hyping high-tech stocks as easy money. They might never recover, no matter how long they stay in the market.
Like the big burger-eater in New York, we’re pointing fingers at the bad guys, blaming them for putting such tempting food in front of us. We shoveled the stuff in, fooling ourselves into believing that there was, indeed, such a thing as a free lunch.
Now the bill has arrived, and it’s time to pay up.
(Joan Ryan is a columnist for the San Francisco Chronicle. Send comments to her in care of this newspaper or send her e-mail at [email protected].)