You will recall early 2009 when the financial world seemed to be in the midst of collapse. Seven years later we can see it more clearly. Hindsight is wonderful. What did we learn?
First we learned that people are emotional. Fear is deadly. Fear makes us want to hide. Financial values have fallen and we are afraid and embarrassed by our stupidity in being this toxic asset in the first place. Value assessment is replaced by negative emotions.
Second we learned that politicians panic more easily than we do. Great running about and flapping arms. Shrill cries for the villains. Experienced people castigated and forced into deals that made little sense. If you are political, the appearance of doing something is more important than the actual results.
Third the Fed bought up huge quantities of asset backed securities of little market value. Boat loads of newly printed money made the deal and created weakly connected fears of inflation. The horror.
Fourth, we learned that politicians, financial writers and TV pundits know little about the derivative market. You will recall the assessment of hundreds of trillions of derivative assets out there. All derivatives have two sides. The net value of all of them is zero.
It is a wonder that we lived to tell the story. Now looking back, what has happened?
So what is the meaning?
Have such a plan or your emotions will eat you up.
Don Shaughnessy is a retired partner in an international public accounting firm and is now with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.
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