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Ask
Auntie Pinko
August
9, 2001
Dear Auntie Pinko,
If the Republicans are good for business, why is my 401(k),
which is 80% invested in stocks, doing so poorly?
Investor,
San Jose, CA
Dear Investor,
You brave soul! Asking Auntie Pinko to interpret the mysteries
of Higher Finance is somewhat akin to casting the bones or
examining sheep entrails, at least in terms of analytical
reliability.
However, Auntie loves a challenge. I phoned up one of my
many nieces and nephews who is a professional financial advisor
and has worked as a fund manager for the Calvert Fund, and
here is what she tells me:
While it's possible to make well-informed predictions about
how any individual stock might perform in a given future period,
the factors that influence "the Market," as a whole, are so
many and varied that you might just as well take your money
to the race track or the casino as attempt to make reliable
predictions en masse, as it were.
Those of you who are familiar with the financial markets
probably already know all this, but I'm so tickled to have
learned about something new that you'll just have to indulge
me. In any case, my charming young niece (she's single, by
the way, loves dogs and lives in the Chicago area�) says that
one of the strongest factors in whether "the market" gains
money or loses it, is something called "confidence."
This is not, apparently, the kind of confidence Auntie Pinko
is familiar with-a belief in one's own abilities and effectiveness-rather,
it's the belief by investors that the market will, or will
not, "perform well."
This sounded a little odd to me, something like The Power
Of Positive Thinking-believe in making money and you'll make
money. But my niece says there's more to it than that, because
of all the other factors that control how the market does.
It sounds fascinating, and I am planning on using the e-links
and book titles she gave me to further research this fascinating
byway of human behavior.
However, just taking the concept of "confidence" and applying
it to your situation, Investor, might provide a clue to the
lamentable performance of your portfolio. Obviously, there
is a distinct lack of confidence somewhere, even among those
Republican business moguls who control so much of our economic
destiny.
Can it be that they lack confidence in the ability of our
leaders to lead?
It does seem ironic, doesn't it, that one of the longest
(and strongest) "bull markets" in living memory occurred under
the auspices of Mr. Clinton's Administration. Obviously, there
is more to this "confidence" thing than meets the eye.
Auntie Pinko will update you as she learns more, and thank
you for writing!
View Auntie's Archive
Do
you have a question for Auntie Pinko?
Do political discussions discombobulate you? Are you a liberal
at a loss for words when those darned dittoheads babble their
endless rhetoric at you? Or are you a conservative who just
can't understand those pesky liberals and their silliness?
Auntie Pinko has an answer for everything! So ask away!
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