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It’s Different This Time; Where have we heard that before? February 24, 2009

Posted by shaferfinancial in Finance.
Tags: , ,

It’s different this time.  You are hearing this refrain much lately, but is it true?  Not to belittle the very real issues our economy has to work through, every time the herd starts mouthing these words you know there is going to be a major change in direction coming up.  The last time was 1999-2000 when tech stocks were flying whether the companies had any profits or not.  Folks actually thought that 20-30% returns were normal and expected those returns to continue forever.  Well, the NASDAQ Index of  stocks never came close to its 2000 peak because valuations became based on actual profits again.  So everything wasn’t different, in fact it was the same.  Historically stocks go through periods of crazy speculative values and also, as we now find out, of equally crazy depressed values.  In the 1970s and early 1980s inflation went crazy, our dominance of the globe seemed to be falling because of the Iranian Hostage situation, we had a recession, and Japan seemed to be taking over economically with some fearing they would buy up all of America.  Then we had the Savings and Loan fiasco.  Things looked bleak there.  But if you put $10,000 into Berkshire Hathaway and/or $10,000 into Microsoft and/or GE (there are many other companies you could have done the same thing to) you would be worth millions of dollars today.

In my opinion it is not different this time.  Sure we have issues.  Sure people have panicked.  Sure the chattering classes have decided we are done for.  But we aren’t!  People will still and can still buy homes (although they need down payments and good credit).  People will still buy cars, although they might not be GMs or SUVs.  Commerce will still occur.  People will still work, although we might have a period of transition where unemployment will remain high.  Computers will still be used requiring software.  People will still eat, maybe just at home more often.  The internet will continue to evolve.  Cell phones will still be used.  Movies and TV watched…………you get the idea!

Remember, the recession will end, probably sooner rather than later.  You’ll still have a birthday with birthday cake!


Now I got your attention, don’t I!  Saturday the Berkshire Hathaway annual report will be posted on its website.  Many folks, including yours truly are waiting for the words of Warren Buffett.



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