It's Lonely At The Top
by Robert B. Gordon, Sc. D.
November 10, 2001
Have you ever felt lonely, really alone? The nation's presidents and the
CEOs of our largest corporations have described such a feeling. They can
receive advice, but the decisions and the responsibility for action are
theirs alone. As President Truman said so clearly and concisely
"the buck stops here."
It is also possible for people at any station in life to feel horribly alone in the position they take on an important issue confronting their community or their nation. Today the state of our stock market and economy provides a disturbing example. Through my 62 years in the stock market and my extensive reading of the history of past manias, I now find myself holding a very lonely view of what is now happening, and is about to happen in the U.S. and the rest of the developed world community.
Although it seems almost unbelievable to me, our giant stock mania of 1982 to 2000 still exists in the minds of a great majority of our population. And the fatal misunderstanding of its cause and eventual outcome are still held by our financial leaders in Wall Street and our political leaders in Washington. The current and planned economic actions by our Congress are based on faulty understanding of our problems, and may well do more harm than good.
There are of course a number of credible bearish experts writing on the Internet, who are typically not beholden to Wall Street views. They were watching in amazement as the market soared to its eventual peak and now realize that, by every meaningful measure, the 1982-2000 mania was clearly the greatest ever in the history of the world. Sadly for both investors' wealth and the good of our country, their words have and are being read by a very small number of investors -- and few if any of the nation's powerful leaders.
The fact that world stock market history shows conclusively the presence of long bull cycles followed by equally long bear cycles has been systematically hidden from investor view by Wall Street's current crop of market bulls. Thus, despite major drops in the leading market indices, bullish opinion is still at high levels anticipating the next rally. Brokerage firm recommended levels of asset allocation to stocks has recently been at an all-time high, and coinciding with the valuation of most stocks in the stratosphere.
The new class of young investors created in the bullish 1990's has been taught to "buy and hold" to retirement. And after a 20 month bear market they show little inclination of changing their minds. True, many older investors and retirees are now showing signs of a weakened resolve to hold their stocks.
Few new or old investors are receiving objective information on past bear markets either in the press or on TV. The media time is given to analysts and "experts" that are handpicked to support the current bullish Wall Street recommendations. Investors are being urged to buy now in order to profit from a hoped-for recovery coming next year. Although scary information on our 1929-1939 bear market experience and the current 12 year Japanese bear market are occasionally covered in our media, it is usually dismissed as not being applicable to our "new era" conditions. But close reading of history shows that every past bull/bear cycle was caught up in its own version of the "new era".
I live in an active retirement community of about 40,000 people - and for at least 5 years have been trying to educate and inform my neighbors on the nature of market cycles and the history of past manias in which the cycle had been completed. In the final years of the stock market bubble, I gave a talk on the history of previous manias and pointed out that all completed cycles had seen prices decline to the starting level or below. My listeners were mostly unimpressed. More recently I have had a number of letters published in our local daily newspaper. None of them, including the latest which urged them to get out of stocks, caused even a small ripple in the community.
I get little pleasure from reading the latest reports from my bearish experts. For, like them, I realize that Wall Street's bullish propaganda has , so far, won the battle for investors' minds. The mania's greed is still alive and well. Mutual fund redemptions are still modest. The eventual major market panic is still some time in the future.
I have no personal information on the investment knowledge and skills of our President and his cabinet or of our Congressional leaders. But from their actions to date I am forced to conclude that they have missed the lessons of prior market history and hence cannot comprehend the magnitude and duration of the bear market now underway. The saddest part of all is that, lacking important historic knowledge, they are unable to respond correctly to the problems ahead, and may in fact compound them through their misguided actions.
Yes, I am lonely because of my inability to pass on my warnings to our Nation's leaders who are in the process of repeating the experiences of 70 years ago. I take some satisfaction for personally keeping several community leaders informed about the progress of the bear market. I take real pleasure that I am alive and able to pass on my hard earned knowledge to my children and adult grandchildren to help them prosper for the rest of their lives.
Successful bears who correctly predicted the bull market's end can, if they live that long, look forward to another lonely life when the new bull finally arrives. History tells us that the market bottom will be devoid of buyers, Wall Street will be a desolate area and bargains will abound. So, the bull market survivors will set the stage for the new advance and the new market cycle repeats its story of fear and greed.
Being lonely at the top and lonely again at the bottom is not all that bad an experience. Give it a try some time!
Main Page for 2001 Essays "The Real Bear Market is Coming"
© 2001 Robert B. Gordon, Sc. D.
Contact Information
Dr. Robert B. Gordon
c/o Roger Gordon
1488 Cynthia Lane
El Cajon, CA 92019
