Obama Defies Pessimists as Rising Economy Converges With Stocks

dtradin said

The dotcom bubble was caused by idiots in charge of their own investments. People who dig ditches, fight fires and do heart surgery may be the best at their respective profession, but that does not qualify them to handle their own money via Scottrade. What happens is people catch on too late to the easy money and put their money in. Others see the easy gains and follow suit. Before long you've got people buying stock based on what the share price is or how much it's increased instead of what the earnings potential is.

It's one of the fundamental problems with our markets and society, imho. Short term solutions to long term problems combined with a lack of discipline has led us to believe anyone can do anything and that cheap is good. The people who invested in every dotcom or IPO were idiots and would have been better off with a balanced portfolio. Instead, there were people taking HELOCs to invest in puppyshow.com.

I can't see how that is Clinton or Bush's fault.

default swaps are a different animal.

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Ahhhh, the dot.com bubble....the best comparison article I ever read about the dot.com bubble was an Op-Ed piece in the Wall Street Journal that ran in the early spring of 1998 or maybe it was 1999 (maybe late February)...I remember the time because I was visiting my daughter in Palo Alto and it was cold and raining, funny how you remember things based on where you were...anyway, the comparison was made with the railroad boom from a century earlier, still the best comparison I've ever seen of the dot.com boom/bust. The two booms have followed very similar investment paths.

Rather than saying the dot.com was caused by "idiots"; I would simply say that people are people, and we haven't changed all that much in thousands of years. It is a part of the human endeavor.

btw...I'll go on record as saying that I have no problem with the basic concept of the credit default swaps, provided that: A) they are listed on a public exchange, and B) the institution writing the swap has to put up reasonably sufficient collateral when they write the swap. Same thing as when you write an option, or the need to have sufficient reserves as an insurance company writing an insurance policy. The problems isn't the swap, per se, imo, it is the amount of leverage that is accompanying the writing of the swap. Just my opinion.