[Brian's Stuff]
Why we only have ourselves to blame over investment losses

“Snowboarding will never be popular as skiing!”

That’s what people used to say in the past but where are they now? This is just an example of an assertion made, based on assumptions, that failed to take into account all possible factors.

And there are many more examples. Case in point: All those people who told investors those funds would never fail.

This is not to put the blame solely on the bank sales people. In a market economy, there is always risk involved. When you make an investment, you hope for the best. Just because your financial portfolio has shed half its value does not mean the sales person is the only person to blame.

Unless you got it in writing that your principal is protected, you can only kick yourself for believing in the words spoken by a mere salesman.

What’s that? You forgot to read the little disclaimer written on the bottom of page 19 that says banks are not responsible for unforeseen fluctuations in the market. You thought that was some leftover ink? Join the club.

How many of us understand the jargon thrown at us when a financial salesman talks about derivatives and funds? I’ve always called it the art of much ado about nothing.

Stocks go up or down. There is a 50 percent chance of getting it right. You would think those are much better odds than getting that promotion that you’ve always craved. You’re essentially hoping that whoever is managing your money full time will do a better job of gambling with it because you are too busy doing some real work. If you ask me that’s a lot of trust you’re putting into a complete stranger.

In what has become one of the worst financial crises ever, the S&P monthly decline last week surpassed the “Black Monday” month of October 1987, while some even have started to make comparisons to the Great Depression of the 1930s, which I think is a stretch.

The current financial woes have us tiptoeing around looking for any insight that might help us navigate this financial Bermuda triangle. Even now, you tune in to the countless predictions put forward by so-called experts who failed to see this coming in the first place.

And the 50-50 rule applies here too. One side will tell you that the worst is still to come while the other says to hold tight, wait for a rebound and take the once-in-a-lifetime buying opportunity.

The reason we are seeing such widespread angst and impact is that more people are investing in stocks than they were decades ago.

In other words, people are increasingly looking to make money the easy way. Driven by this insatiable greed, people in the business have come up with complicated ways of rolling over debt and refinancing.

Now this practice has come back to bite us. Credit markets have clamped up, making it impossible for firms to borrow money because no one really knows how bad things will be as the risk of additional writedowns, which started this whole chain reaction, is very much real.

In the future, money movers will have to do their jobs with lower levels of risk and leverage but at the end of the day, when things turn sour again we only have ourselves to blame for any pitfalls we might suffer. There is no such thing as safe investment. You take your own risks.

[africanu@joongang.co.kr]