Tax Guru-Ker$tetter Letter
Monday, July 22, 2002
Whose Fault Was It?
In hindsight, almost everyone is now admitting that the high values placed on stocks during the dot-com frenzy were wrong. I took a lot of flack for saying just that during the market run-up by people who fell for the con that the old fashioned business & market cycles were permanently extinct.
The cartoon below actually illustrates the situation in that crazy market. However, the blame for the market bubble is a different story. The cartoonist, Ted Rall, is a proud leftist and is trying to give the impression that the evil corporate executives were at fault. As always, I see this from a completely different perspective.
Those stocks couldn't have been sold if there hadn't been people willing (stupid enough) to buy them. I have yet to hear a story of a corporate executive sticking a gun to the side of an investor's head and forcing him to purchase stocks at inflated values. I lay the blame squarely at the feet of the idiot investors. While many of them were simply following the leads of the media and stupid financial advisors, common sense should have alerted them to the folly of their advice.