Madoff, Malls, and Misery

Sunday Morsels

Each Sunday, I toss out a few ideas that I have been thinking about during the week which don't quite make it into full-blown Posts. If I receive enough feedback on any given topic, I'll expand on it in the future. Let the commenting begin!

First off - Dozens of well-off New Yorkers and Floridians lost millions in the Madoff ponzi scheme, and some of them are crying over money as if their child had just died. Whilst I fully agree that the SEC was asleep at the switch and Madoff himself is a crook who deserves not one iota of empathy, these adults who dumped practically ALL of their liquid assets in one investment should look in the mirror and ask themselves who is ultimately to blame. Give 10 or 15% of your assets to a trusted friend....Sure. Concentrate your entire financial existence in one basket (regardless of how confident you are in that advisor's abilities) and you are your own worst enemy. It's the Airplane Yellow Oxygen Mask theory - make the right decisions for yourself first, or risk becoming useless to everyone around you.

Second - I was shopping the stores this weekend, and Lo and Behold my prediction from over a month ago appears to be coming true -- the stores were packed. Bloomie's, J. Crew, Williams-Sonoma and sundry other stores were all doing brisk business. Look for Media news stories to start appearing in about 10 days' time which corroborate what my Blog readers already know: Holiday 2008 will certainly be down from recent years, but far from a disaster.

Third - Everyone on the Equities side of the financial services industry, and to an extent millions of investors, currently suffers from a case of "Volatility Fatigue". The daily swings in the market, which have been relentless for nearly three straight months, have put people into a state of acceptance. The zeitgeist now is "OK, I am down 35-40% on my 401K...I have made peace with that fact". I sense a blanket of calm resignation and a collective mental writeoff of 2008 as a year to forget. The hope is for a partial (real estate/stock market) recovery in '09....let's see how the populace handles the situation 6 to 9 months from now when credit is still tight, hundreds of thousands are losing their jobs, and government bickering (as witnessed over a paltry $15 Billion to assist the auto industry) yields a continued "no confidence" vote in the marketplace.