Reader and friend Dan sent me this e-mail the other day…
“During the financial crisis I find myself checking your blog multiple times a day for some spiritual relief!”
I don’t know if I’ll provide any spiritual relief, but I do have some thoughts on recent events, and since you asked…
So it’s being reported that the fall of these Wall Street institutions and subsequent bailouts has erased something like 1 trillion dollars of wealth. One trillion. Big number.
That’s such a big number that yesterday I got a letter from my stock advisor dude. This pretty much sums up his message. (God, I love YouTube!)
First, I find it interesting to look at what is at the core of this event. Not in the sense of blame (greed! foolishness! instant gratification society! blah blab blah), but understanding the true dynamics of what occurred.
What happened was a crisis of confidence. The quote below makes the point well.
What we are witnessing may be the greatest destruction of financial wealth that the world has ever seen — paper losses measured in the trillions of dollars. Corporate wealth. Oil wealth. Real estate wealth. Bank wealth. Private-equity wealth. Hedge fund wealth. Pension wealth. It’s a painful reminder that, when you strip away all the complexity and trappings from the magnificent new global infrastructure, finance is still a confidence game — and once the confidence goes, there’s no telling when the selling will stop. — Steven Pearlstein from the Washington Post, 9/18/2008
For all the dollars in circulation, there’s no gold in the treasury backing the value of that currency. The U.S. government did away with that a long time ago. They just kept printing money and we all entered into the collective agreement that little slips of colored paper carry some value.
My point is this — money is made up. An idea. Confidence. A belief.
Never forget that!
That’s the good news. If money is a belief, then guess who’s in charge? You, my friend. You are in charge. Not Wall Street. Not stock tickers. Not talking heads on television. Not “the economy” or the “housing market.” Not computer screens telling you your balance of the value of your IRA. Not bills that arrive in the mail.
You are in charge of your feeling and beliefs about money. You are in charge of the degree to which you allow money to flow into your life.
Of course, there’s a catch to this good news. This requires you to be responsible for how you feel about money, responsible for your confidence level, and responsible for the beliefs you allow to touch your life…
As you might guess, this is where most people fall off the wagon. In fact, most jump off and head for zee hills, screaming. The REALITY they say (with a charge in their voice) is that I’m worth less than I was yesterday! I won’t be able to retire! My business will dry up in this slow economy! I’m doomed, man! Don’t you hear me? Dooooooomed!
You get the idea.
And I say, if that’s the reality you choose — if you forfeit responsibility for managing how you feel with regard to money and lose your cool — well, money will return the favor.
Again, we’re told a trillion dollars evaporated. And certainly, that’s a sobering number. But you know what? I didn’t feel a thing. The next morning the sun still came up. The geese flew by. My coffee was hot. The 80 bucks I had in my money clip was still there. My cat kept eating flies. My wife still seemed to dig me.
If I were to check online at my investments, my guess is that the numbers on the screen would be different than the month before. Probably lower. But I invest for the long haul, so I don’t much concern myself with volatility. And the greater truth is that I’m only really concerned with how I feel today. I’m not thinking about retirement. I do not believe in the concept of “security” (it’s a euphemism for living in fear).
I’m focused on the now. And I believe that if I focus on now, feel good… well let’s just say that living this way works much better for me that spending my time worrying about a boogeyman (or boogeymen) who supposedly looms just around the dark corner, waiting to pounce on me. In this moment, right now, the only moment we have, everything is cool. Why go anywhere else in your mind?
In short, this requires you to live in the present and actively manage how you feel in any given moment. Many people say this is folly, foolish, maybe even dangerous. They believe that it’s more responsible or more helpful to hem, haw, and worry. So be it. I’ve given up my need to convert anyone — we’re all free to choose how we want to live.
But I’ll say this in closing. A common goal (one that I have to) is financial freedom. But it’s critical to remember that that freedom does not exist in a bank statement, an investment account, or in little slips of colored paper. True freedom exists in only one place: Your mind.
Why not choose that? Right now.