Paul Meloan – Vested Interest

by Paul Meloan

Today, the current bull market is two years old.  On a Monday in March, 2009 the market bottomed out after reaching its prior peak in 2007.  What began as a more or less typical bear market that year escalated into the biggest financial mess of my professional lifetime.

What made 2008 different was the existential threat to the solvency of the financial system: the confidence necessary to facilitate transactions and conduct business on a normal basis.  Depending on who you believe, at some point in September, 2008 we walked right up to the edge of the abyss and took a look inside.  No one was looking back at us (see Hal Holbrook, Wall Street, 1987 dir by Oliver Stone).

What made 2008 the same was the idea that while capitalists could be a bunch of screwups, capitalism was still capable of functioning, and offering a positive expected return to persons willing to endure the risks.

Matt Taibbi fans will say that the market collapse was the direct result of the greatest financial fraud ever perpetrated.  He may have a point, particularly in light of the fact that not a single Wall Street figure from this crisis has ever been charged with a crime.  I will not be holding my breath until one is.  

Celebrate the occasion today by trying to remember, as honestly as you can, what you were thinking about and what you were doing with your capital on that Monday in March, 2009.  Congratulate yourself if your planning, and your belief in that plan, permitted you to make rational, thoughtful choices back then, without regard to what may happen that day or the next.   If it did not, ask yourself "why not"?  The next crisis is coming, we just don't know how, when, or why.  If our planning is sound, and our thinking is sound, we don't have to know those things.  They won't matter any way.

Happy Birthday, bull market.

Paul Meloan is the co-founder and co-managing member of Aegis Wealth Management, LLC, in Bethesda, Maryland USA. Before Aegis Paul was a practicing attorney as well as working in the tax practice of Ernst & Young, LLP.

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