Dave: Okay, and I’m retorting a little tongue in cheek here, but, dude! While I would certainly concur that certain folks aren’t equipped to own stocks, I would also point out that your post is, in part, somewhat disingenuous.
In terms of valuation and volatility, we have parts of an entire industry (MBS) that were literally shit marketed as gold and done so with the implicit and explicit support of rating agencies (like Moody’s and Fitch), investment banks (like Bear Stearns and Lehman Bros) and blue chip insurers (like AIG). You have instruments that would be lucky to be considered junk bonds marketed as AAA rated and sold as such to buyers and buyers whose only mistake was trusting the rating agencies, bankers and insurance companies.
The entire finance system is driven by trust and, through a nearly insane confluence of greed, deceit and hubris, it was nearly blown up. You yourself made the point that we’re not facing a credit crunch, rather we’re confronting the fact that there are billions of dollars of crappy assets out there, soiling up the balance sheets of thousands of companies, banks and funds and that’s causing lending to seize up.
For you to say, “Well, the average investor is temperamentally ill-equipped to accept the volatility” simultaneously avoids certain realities and obscures the fact that the folks selling this trash were literally trying to mis-price the risk right out of the market.
As a banker, I’d think you’d have to admit that the re-pricing of that risk effect is having especially vicious consequences right now: The self same “crappy assets” scenario writ large.
