The Slippery Slope of Hope(lessness)

Banking's Bear Roars Again

If you thought the worst is behind us, or that the credit crisis hit bottom in the first quarter, or that there are signs that the loan market is coming back, or that Wall Street firms are finished with their capital raising, Meredith Whitney has three words for you: You are wrong.

Tice Proves Every Bear Has a 9.5% Return as He Invokes `D' Word

``Don't bet against the Fed,'' says Olstein, 66, whose fund is down 6 percent this year. ``The worst is over, and the market is looking to turn; and when it takes off, the bears are going to be in for a good butt kicking.''

It is clearly personal and emotional, which to me is a very dangerous mindset to have when investing.

The credit meltdown runs so deep that the prosperous years on Wall Street that began in 1982 are probably drawing to a close, says Barton Biggs, 75, managing partner at Traxis Partners LLC, a New York- based hedge fund.

``We had a spectacular era of financial success that was extended by the subprime mortgage mania to 2007,'' says Biggs, who was chief global strategist at Morgan Stanley until 2003. ``But I think the golden age of Wall Street is over.''

The golden age appears to have ended in 2000. It is possible that stocks will do okay in the future but the 1980s and 1990s are over. We need to get over it. TV shows such as "Fast Money" and "Mad Money" tell me we haven't.

Boomers Change Retirement Plans Due to Recession Fears, Bell Investment Advisors Survey Reveals

“The current economic slowdown is not a cause for panic among those with a clear retirement plan and sound investment strategy,” says Jim Bell, founder and president of Bell Investment Advisors. “The key to navigating the slow-down is to remain rational and stick to a plan, rather than letting emotions steer you off track,” he said. “An economic slow-down is measured in months in contrast with retirement, which will last several decades for most boomers.”

As comments left for me have stated, if one must panic at least panic first. Economic slow-downs are measured in months? I guess we're starting our historical analysis beginning in 1982 again. Why is that such a popular starting point? 1965 to 1982 was nearly "several decades" and investment returns were very poor. But hey, that was a time of rising oil prices. What are the odds of that happening again?

Based on the survey, more than half (54 percent) of affluent boomers cited higher returns on investments as a primary goal for the next five years. “This finding underscores the fundamental lack of understanding many investors have about risk and return. Boomers will not achieve higher returns if they shift to more conservative investments as the survey findings suggest,” said Bell. He recommends that boomers retain a healthy portion of their assets in growth-oriented equities, so that their nest egg continues to grow.

That's one way to look at it I suppose. I might suggest that 46% do not cite higher returns as a primary goal. That would include me. I just want to protect what I have. Further, I would argue the author has a fundamental lack of understanding about risk and return. Taking on more risk does not guarantee higher returns. The nest egg continuing to grow assumption would fall apart if the risk actually kicked in.