A Decade of Delusions: From Speculative Contagion to the Great Recession

Chapter 5

The “Greenspan Put”. . . Again1

Source: © FactSet Research Systems.

This year’s truncated offering is respectful of Einstein’s admonition: “Make everything as simple as possible, but no simpler.” Accordingly, you will find this report a little light on numbers and a little long on opinion. Reasoned judgment has been in short supply in recent years, and this monograph may be a (subconscious?) attempt to help fill the void. All of us are inundated with information about recent events or happenings, especially as reported by newspapers, periodicals, radio, or television. Regurgitating the facts of yesterday may bring a form of catharsis, but it adds little value. On the other hand, reactions to essays that challenge conformist thought might well run the gamut from raising the reader’s ire to piquing his or her curiosity.

Investment Strategy

Although this report is annual, the formidable task of formulating a rational investment strategy in a chaotic world is like warily tiptoeing back and forth along a gymnast’s five-meter balance beam. Forces from all sides persistently threaten to knock you off your perch. They include:

• The ongoing nightmare, aggravated by fear of the unknown, of another surprise attack by fanatical terrorists.
• Possible war with Iraq that could explode into a regional or global conflict of unknowable proportions.
• A schizophrenic economy that seems to ...