The Year All Bets Were Off… Again.

Alexander Wissel, Editor in Chief, Investment U

We must stumble across this expression ever couple of years: All bets are off, the new economy Web 2.0, the new - new deal, it’s different this time… and so on.

Let’s face it. The evolution of technology and the revolution it causes has a huge impact on how we do things and that’s not going to stop. Unfortunately, in our rush to get on board to the next big thing we miss out on the fundamentals that were there for a reason.

Many remember when education was nothing but the three R’s. Reading Writing and Arithmetic. Then we discovered feelings and personal development. Educators rejoiced by saying learning would never be the same, and the old ways were dead.

And in the rush to protect every child’s feelings and every dream, we forgot about the basics. Which impacted the system through practically illiterate children unable to count or write – but they felt great about it. Eventually we went back to focusing on the three R’s, but not without considering every child.

The markets have the same cycle every few years. We’ve created and followed the new paradigms for years: be it the web, CMOs, indexing, mutual funds, buy and hold, Dow theory, dartboard investing, etc.

Yes, some of these updates do change the landscape of how we invest. But we should think of every new addition like a new tool. Just because we have a new tool-thingamajig doesn’t mean we won’t still need the hammer.

And from the other perspective – Just because you were forced to go back to the hammer, doesn’t mean the new tool-thingamajig isn’t useful.

So when you hear experts throwing around these statements like “it’s different this time.” Yes, today’s different than “last time” but not by much. So lets not forget all the lessons and solutions from last time. Be cautious. But don’t go overboard.