Jim Woods

It's Not Too Late To Go Short

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Last weekend I attended a cocktail party hosted by an acquaintance of mine. Here are just a few of the things that were said to me when the partygoers found out about my vocation:

"I'm not concerned with businessmen, after all, what good have they ever done society?" asked the man with gray hair pulled back tightly in a ponytail. A self-described artist, this man had spent nearly six decades on earth without ever commanding payment for his art.

"Oh, so you're in the financial industry? Well, then, you must agree that it's the government's duty to help bailout everyone from the greed of those fat cats on Wall Street?" said a woman who designs and sells jewelry at street fairs and swap meets. Although she put countless hours into creating her baubles, she felt it wasn't fair to charge more than her material costs.

"I recently had the misfortune of being caught up in this whole subprime thing. I had to give up my house, but it wasn't my fault. After all, how could I be expected to pay my mortgage when nobody told me that interest rates could go up or that my loan payments would adjust upward?" This from a man in his early 30s who felt it was his right as an American to be given a loan that he could afford.

Now, if it seems as though I was trapped in a scene from Ayn Rand's "Atlas Shrugged," well, that's just what I thought, too.

Cocktail Party Economics

You see, when it came to the economics at this cocktail party, the ignorance was palpable.

Not only did the guests I spoke with not have even the foggiest idea of how the economy or the stock market work, most of them didn't even know that what they were saying was part of a series of much more pernicious fallacies.

One fallacy is that businessmen are just evil and greedy, and that what they do doesn't contribute to society in a positive way. Another fallacy was that a "fair" price to charge for your efforts isn't what the market will bear.

Finally, there was the omnipresent sentiment that "it's not my fault" if I can't pay the bills, it's the fault of those bums on Wall Street.