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Confessions of a Money Manager: Don't take the bad news so hard

Ray Unger  —  5/23/2008 12:56 pm

It's Memorial Day weekend. The kids are out of school, swimming pools are open for business, and golf courses have finally turned green. That spells happy family vacation time. Wow. Can life get any better?

But wait, gas is almost $4 a gallon, and virtually everything we want or need is priced as if we're Arab sheiks. And the most important thing of value that we own -- our home -- is melting faster than a North Pole glacier. So how can we possibly look forward to this Memorial Day? Cheer up. Those $600 tax refund checks from Uncle Sam should help. Give me a break. That will take us through a week or so. Then what?

Remember the good old days when gas and cigarettes were really cheap? The Memorial Day of 1963 came just before I graduated from high school, and one of my classmates worked at the Purple Martin gas station near my home. My friends and I would drive in, and my buddy would say with a cryptic smile, "Filler up?" He knew how we teenagers thought. Why fill up dad's car when all we wanted to do was drive to the county line and drink beer at the teen bar? Our standard reply was, "A buck's worth." Then we'd sometimes ask for a pack of Kools (girls liked menthol cigarettes back then, and if we met a few at the bar we could impress them with cool Kools). A pack of cigarettes and gallon of gas each sold for 25 cents.

Indeed, life was good. We didn't have a care in the world. Since college was months away, I got a summer job working at a local factory and made minimum wage ($1.25 per hour). I even bought an old, but pretty good running 1950 Dodge for a mere $45. And for fun we played golf at the local municipal golf course -- $1.10 for 18 holes. Of course when we turned 18 we had to worry about the draft. But hey, if Elvis could hack the Army, so could we.

So what was in our future? Let's see. In the later '60s we had race riots, Vietnam, and Nixon. In the '70s, we had more Nixon, the Arab-Israel war that tripled oil prices, and stagflation. But at the end of that decade, we were introduced to that lovable jokester, Ayatollah Khomeini, and Islamic extremism. In the '80s we enjoyed double-digit interest rates, another tripling of oil prices, a major recession, and a stock market crash that we affectionately call "Black Monday."

Don't get me wrong. I'm not complaining. My generation had a virtual picnic compared to our parents. They only had the Great War (later to be called World War I), the Great Depression, World War II, polio, Korea, and the Bomb.

My point? Don't believe any of that horse-hockey about the good old days. Today's problems -- high gas prices, inflation, wars in Iraq and Afghanistan, recession, fractious politics, global warming, etc. -- are indeed troublesome. But we should remember what investors said back then and don't over-dramatize today's ills. I can recall an annual meeting of the Wisconsin Alumni Research Foundation -- this was December 1974 -- when one of the trustees stated that he thought the days of our free democracy and capitalistic system were numbered. At that time the Dow Jones was hovering near 600. That's not a typo. The Dow Jones Average was 600 then compared to today's 12,820. Oh but wait, the Dow is up some 21-fold since 1974. How can it possibly go higher?

Folks, give the deeply pessimistic blather a rest. In early April I gave a presentation to a group of freshman football players at the UW and ended by telling them that if I was their age I would be very optimistic about what's ahead. After I finished, the host of the event called me aside and said he thought my closing was refreshing -- all of the other presenters were very pessimistic.

So cheer up investors. Today's problems are no worse than yesteryear's. If you believe the oldsters who swallowed amnesia pills and carp about the good old days, just chock it up to envy; they secretly wish they were young again. Just as our generation worked through the never-ending troubles of our day, you'll take up the gauntlet and plow through today's troubling issues. So buy stocks and press on.

Ray Unger is chairman of Forward Investment Advisors in Madison. He can be reached at 833-9400.

Ray Unger  —  5/23/2008 12:56 pm