Who, exactly, is recommending “sitting on your ass” or “doing nothing”? Even some of the most bearish Piggs (including myself) have bought in the past few years, and many of us actively manage our own money. Most of the bears on the Housing Bubble Blog (some would argue they’re some of the most bearish folks on the internet) have bought, too!
BTW, the people I’m talking about (and I’m sure ER’s examples, too) are nowhere near dumb. Some of them are exceptionally intelligent and have had significant success in life, often multiple successes. That’s what makes it so scary — these ARE the smart ones, and they fail in a big way. It’s humbling because you realize how vulnerable we ALL are, no matter how smart or rich or well set-up in life.
Nobody’s saying you should do nothing, but to ignore the potential for fairly dramatic economic shifts would be foolish. Using leverage for asset purchases in the hopes that someone else will leverage even more so that they can pay you a higher price for these assets in the future is very risky, especially when everybody else is doing it at the same time. With money so cheap/interest rates so low, there is a much greater chance of things going sideways. And then, there are the demographic issues to contend with. I think that a lot of people don’t really understand how risky it really is.
