Do you feel investors are prepared for what lies ahead in the coming years?
It is amazing to me and anybody in the investment community really, if they're honest, how strong the recency bias is. Meaning if life was good last week or the month before, life is going to be good forever. Yet, in only a very short period of time, I mean since 2000, we've had two major financial crises. We almost forget that happened. In fact, we sort of... Well that's an aberration, no that's obviously the normal. That's the real normalcy bias is that we have these crises and we're having them I think because we're having bigger problems in terms of growing our economy fundamentally. Not going to go into that in big detail, but fundamentally it's not growing like it used to, yet our financial asset prices are going up due to government stimulation.
Ultimately, that's going to be a huge problem and not just ultimately...people think it could be years off. Again, people in 2004 thought California real estate could go up another 15 years at 20% a year, yet only one more year. That's all it was. In January of 2000, more money was put into early stage venture businesses that any other month previously. Three more months later, the Internet bubble collapsed. This stuff can change quickly even if everybody thinks it's good, because there's a recency bias..."Yeah, but last month was good Bob. So it's going to be good for the next 20 years"...don't think so. Be careful, diversify, and be sure you have something like gold as well as part of that diversified portfolio. It may become the only thing that really performs longer-term.