Free Rise

Also from yesterday’s FT-sponsored Financial Services Marketing breakfast, Richard Waters dropped these Six nuggets of received wisdom that have been discredited by the financial meltdown.

• Stocks go up 10% a year. So what if you’re going to retire in a few years? Why miss out on more gains by preserving your savings in boring CDs and bonds?
• You can beat the market. Just ignore what Bogle and his adherents have been proving for years. Cramer will get you your returns.
• House prices only go one way. Waters told a story about a fight he and his wife had after a real estate agent in Marin tried to convince them of the truth of this. Fortunately for the Waters’, he won that fight. Millions of others were not so smart (like Suzanne’s hapless clients. What? What?).
• Financial innovation is good for you. Forget about how Orange County went broke investing in these newfangled “derivatives.” Go ahead and bet the whole financial system on incomprehensible instruments. It’s science, people!
• Big banks can’t go bust. They’re way too diversified, right?
• You can’t go wrong giving your life savings to a middle-aged white guy. Especially if he’s named Madoff or Stanford. Interestingly enough, this seems to describe the staff of the FT.

Killer quote from the Financial Times‘ veteran financial reporter Richard Waters, at yesterday’s (4/22/09) Financial Services Marketing breakfast, sponsored by the FT. (Great event by the way.)

“People say we are in challenging times now. And I think it’s obvious that ‘challenging’ hides a lot of sins.”

Challenging, and sinful, times indeed. What’s been most disgusting about this global downturn is that it’s turned our world upside down. Entities and enterprises that seemed beyond reproach and the envy of the world are now disgraced by their own failure and corruption. And the catechism of our markets has been proved a lie.

Next post: Six nuggets of received wisdom that have been proved false.