The active investors will have their returns diminished by a far greater percentage than will their inactive brethren. That means that the passive group - the "know-nothings" - must win.
Anything can happen anytime in markets. And no advisor, economist, or TV commentator-and definitely not Charlie nor I-can tell you when chaos will occur. Market forecasters will fill your ear but will never fill your wallet.
We will continue to ignore political and economic forecasts, which are an expensive distraction for many investors and
businessmen. Thirty years ago, no one could have foreseen the huge expansion of the Vietnam War, wage and price controls, two oil shocks, the resignation of a president, the dissolution of the Soviet Union, a one-day drop in the Dow of 508 points, or treasury bill yields fluctuating between 2.8% and 17.4%.
I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.
There's not many businesses where someone can come in and offer to cut the price in half and somebody doesn't think about shifting. But that's the nature of the ratings business.
We are trading away a little bit of our country all the time for this access consumption that we have over what we've produced. That is not good. I think it's terrible over time. But our country's productive grows enough so we actually can do that, and we'll still be better off. We just don't be as well off as if we hadn't done it.
Today people who hold cash equivalents feel comfortable. They shouldn't. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value.
Having a large amount of leverage is like driving a car with a dagger on the steering wheel pointed at your heart. If you do that, you will be a better driver. There will be fewer accidents but when they happen, they will be fatal.
If I taught a class, on my final exam I would take an Internet company and ask, 'How much is this company worth?' Anyone who would answer, I would flunk.
We have provided capital here with a couple of institutions recently. The Federal government did that in the '30s for the RFC and I think there could well be a proper role for government in that.