How do you compare investor confidence today with that which existed prior to the “Great Depression”?

People often forget that before the great stock market crash of ’29, we had other stock market crashes and stocks had gone down in ’27, they’d gone down in ’28, and they actually gone down in ’29, but they all staged nice recoveries. So people said, “Well that’s a sign that everybody is feeling good and we’re feeling great, right? The market has gone down and it’s gone back up; there’s no risk here.” Of course markets go up and down, but what they’re missing is that underneath all that was fundamentally a bubble that is going to correct hugely, and that’s exactly what happened in October of ’29… is it popped.

I kind of see the same mentality here today is that people say, “Well, we’ve been through a financial crises and it’s come back up and we might even go through another correction and it comes back up,” but what’s happening is they’re missing the fact that you’re going to have a big fundamental change just like you had in 1929, a very fundamental correction in the market. I think much more fundamental than we had then as well, but that’s fundamental enough for most investors is to be something to be aware of, and to get out of, and in front of, and of course also to get in alternative investments. But I see a very similar mentality in that sense… is that people in a sense are almost getting more, more confident even as they should be getting less confident. We know that from history in 1928 and ’29 that they shouldn’t have been getting more confident, but they were, at least on the surface. That’s the same thing happening today… is people are apparently getting more confident, when they should be getting less, but I’d say underneath there’s a lot more fear there than your seeing and that’s why things can happen very, very quickly.

Of course, we’re at an age where news travels fast, everybody sees everything 24 hours a day on the Internet, on TV, and so this can be something that moves very, very quickly when it finally moves. Now, I think they’ll be signs before it moves. I don’t think it’s going to happen out of the blue, but most people aren’t going to be looking for the signs or they’re going to be looking away from those signs; they don’t want to see it. That’s going to be a big difference between the intelligent investor going forward and the unintelligent one is that they’re going to be looking for the signs of a problem.