I was wrong

by JDH on August 22, 2009

In last week’s commentary I walked you through all of the bad news headlines. There were more bad news headlines this week, but I won’t bore you with them. I won’t bore you with the headlines you won’t be reading either, because they don’t matter any more. (Headlines like four more banks closed this week; you can read the list at the close of business every Friday on the FDIC web site. Play the drinking game with your friends: how many banks will close this week? You can take a shot for every branch that closes. Unfortunately you will die of alcohol poisoning before you can read my commentary next week).

No, I’m not going to bore you with bad news, because it doesn’t matter. The Dow closed above 9,500 for the first time since November, 2008. The S&P 500 has settled above 1,000 for the first time since October, 2008. Happy days are here again.

So, I capitulate.

I give up.

On Monday morning I will take my portfolio, which is essentially all cash at the moment, and I will invest it in index funds, or stocks, or ETFs, or anything associated with the market. Everything is good, and I want to be a part of it, so I will fully invest.

Every dime.

I was wrong. I was wrong to believe that massive government deficits would be bad for the economy. Obviously spending is good. Obviously encouraging Americans to take perfectly good used cars, with no debt, and trade them in for Toyotas and Hondas, financed with debt, was a good move. I was wrong to believe that living frugally was a good idea. Obviously over-leveraging yourself to buy a new car that you don’t need, and that you wouldn’t have purchased if the government hadn’t given you $4,000 towards the purchase price, is brilliant financial management.

I now hope that the government starts the Cash for Condos program, where homeowners are encouraged to burn their houses to the ground and build new ones, thereby creating jobs. How about Hatchets for Highways where we blow up our highways and build new ones, thereby creating jobs.

Bucks for Bridges! It’ll be great! Blow up bridges, which will be a tourist attraction, and then re-build them, creating jobs.

I was wrong. Obama is smarter than me. He was right. I was wrong. True, he did underestimate the deficit, and next week he will admit that over the next ten years the deficit will be over $9 trillion. Well, I guess he won’t admit it next week, since he’ll be on vacation, but those are the new numbers.

Where should I put my money? I have no idea.

I don’t want to put it into banks, because they keep failing. The car companies aren’t a good bet, because the Cash for Clunkers program ends on Monday, so there won’t be many more car purchases for the next little while. Unemployment remains high, so consumers aren’t spending much these days, so I guess consumer goods aren’t a good bet. Maybe swine flu vaccine makers?

Here’s my plan: The Boys and their families are coming over for a barbecue this afternoon, so after I’ve had a few pops with them I’ll ask them where to put my money, and on Monday morning I’ll dump it all in. If they have no ideas I’ll throw some darts at a board, and wherever they land, that’s what I’ll buy. During boom times like this, what I buy won’t really matter.

(If you are a religious person, please pray that I come to my senses before Monday morning).

See you next week.