Saturday, March 28, 2009

Investment: This Word Must Die

When words die, so to speak, because of overuse or misuse, this can provide an important view into what we feel and think. When I hear someone of advanced years, say something is "cool" a harsh wrong note is struck. At some point, certain words must be dispatched for sanity's sake. Otherwise, the whole individual demeanor becomes pathetic. Moving on can be tough, but one must. Language moves on too.

When I see politicians, Barrack Obama is simply the latest, spouting the joys of "investment" in education, health care etc . . . I feel that "investment" is the latest candidate for euthanasia. It must die.

Ponder this, investing is putting your money in a financial instrument and getting your money back plus some sort of return or profit. If I buy a stock, it appreciates (hopefully) and I sell it, get my money back and a profit on top of that. Bonds do it differently, but the result is the same. (again hopefully) I'll forgo the list of investments like real estate, art, gold, baseball cards etc . . . because the concept is rather obvious. However, now, politicians of all stripes extol the virtues of "investment". You'd think after the Internet Bubble, this term would have been ditched. Enron, World Com, Global Crossing should have damaged this one, but words die slowly.

We interrupt this blog for a disclosure announcement.

Yes, I once did own Enron. No, I didn't lose everything. I lost 10 percent. The thing that saved me was something I read in this book, The Battle for Investment Survival by Gerald Loeb It's called the ever-liquid account. I won't explain it here because if you are interested, I want you to read the book and learn. What's so special about this book? I could say Barton Biggs loves it, but then I'd have to admit I'm just using his name cause I like the sound of it. (like something from Dickens) The real reason is because this book lays out exactly what we do when we "invest." We are speculating. Our money may vanish in a flash. This is risk. Like the ocean, speculation holds no mercy in her. You adapt to her, ride her or suffer the consequences.

If this were exactly 10 years ago. I might have gotten a lot of hearty laughs. In 1999 stocks simply went up, they didn't go down and they certainly didn't disappear, presto-chango. Now, sounding like the AP, some of America's most trusted companies are gone or on the rocks. Still, the word "investment" endures.

For years, politicians have been borrowing words from other occupations, they feel engender trust. The use of the word "investment" could follow this path. Or it could be that many of the pols have been hanging (can we get rid of this word too?) with the financial companies that use this word everyday in the course of business like AIG.

How would I know who "hangs" with AIG? Well, I only know who got money from AIG. In 2008 alone, Senator Chris Dodd got $103,000, President Barack Obama got $101,000, Senator John McCain got $59,000, Secretary of State Hilary Clinton got $36,000 and Senator Max Baucus got $25,000. That's only the top five AIG beneficiaries.

So when some pol talks about "investment" in education in failing schools or "investment" in an unproven health care system or "investment" in uneconomic energy, reflect on it. Think about what investment really is. It's speculation pure and simple. Or as Barney Frank would say "it's a roll of the dice." Unless, of course, you're being paid like the aforementioned pols to speculate, I mean, "invest" with other peoples' money. That's not risk. That's a layup and I think we can still use that word. Let that one live.

No comments:

Post a Comment