Some Thoughts on Greed

Oliver Stone has a long history of being one heck of a director. From movies with titles like "W", "J.F.K." and "Wall Street" he's shown an incredible ability to effectively--and loudly--voice his opinions of our presidents and our economy. Plus, he knows the impact of words.

Take the movie "Wall Street", for instance, in which the slimy corporate-raider character Gordon Gekko declares, "Greed is good". Better than good actually, greed is a must-do if one is (to) succeed in the often-manipulated world of Wall Street. Imagine if he'd used the word "avarice" which is probably a more accurate choice given the message. Problem is, it just doesn't have the same ring as "greed." "Avarice is good". Not gonna fly. But greed is good sure did. So much so, its notion seems to have been believed. Worse yet, practiced.

Anyone who's watched or invested in the markets for decades understands cycles. History has shown that about every 20 years a financial mess of some sort appears that sends investors and media into a the-sky-is-falling panic. And indeed for some, the sky does fall and their financial world caves in.

For those seeking perspective, however, here's look back of market crashes that have occurred in roughly 20-time increments: The first, 1819, then 1836, 1857, 1873, 1893, 1907, 1929, 1987 and now, 2008.

There has been a lot of finger pointing lately trying to discern the who, why and how behind this market crash. Some are calling it a "crisis of confidence". There's probably some truth in that but I happen to think that behind all the derivatives, investment product hypes and the mortgage and banking mess is an underlying societal belief that has permeated both those on Wall Street and investors of all ages and stages of investing experience for the past 20 years. Namely, that greed in fact is good, no matter what the cost.

Greed, however, has never been good. Heck, it's even one of the Catholic's seven deadly sins. Yikes.

Perhaps with the passing of this last 20-year cycle ("Wall Street" came out in 1987), Wall Street's new investment philosophy will be a common sense one in which saving for the future makes more sense than excessive opulence and (includes) a simple discussion about that four-letter word R I S K precedes every sales pitch.